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▪	the potential advantages of XHANCETM and our product candidates;

▪	the planned launch of XHANCE in retail pharmacies in the United States in early April 2018;

▪	our expectation to achieve 65% coverage of commercial lives during launch;

▪	our ability to secure broad market access in the commercial segment for XHANCE by targeting Tier 3 payor coverage, single step edit with no prior authorization;

▪	planned product development activities, studies and clinical trials, including our plans to initiate additional clinical trials of XHANCE in the fourth quarter of 2018 in pursuit of a follow-on indication for chronic sinusitis;

▪	our expectation that our existing cash and cash equivalents will be sufficient to fund our operations and debt service obligations through the end of 2019;

▪	our plans to commercial plans and objectives for XHANCE and our product candidates;

▪	the size and growth potential of the markets for XHANCE and our product candidates, and our ability to service those markets;

▪	our ability to develop sales and marketing capabilities, whether alone or with potential future collaborators;

▪	the rate and degree of market acceptance of XHANCE and our product candidates;

▪	our ability to maintain regulatory approval of XHANCE and our product candidates;

▪	our ability to attract collaborators with development, regulatory and commercialization expertise;

▪	regulatory developments in the United States and foreign countries;

▪	our ability to operate our business without infringing the intellectual property rights of others;

▪	the scope and duration of patent protection and other barriers to entry that we expect to benefit XHANCE and our product candidates;

▪	the performance of our third-party suppliers, manufacturers and contract sales organizations;

▪	the success of competing products that are or become available;

▪	our expectations regarding our ability to obtain and adequately maintain sufficient intellectual property protection for XHANCE and our other product candidates and to avoid claims of infringement;

▪	our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act; and

▪	the accuracy of our estimates regarding expenses, future revenue, capital requirements and need for additional financing;

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•	Commercial Supply Chain.  We have entered into commercial supply agreements with our key suppliers, spent significant time with our suppliers to oversee product production and quality management, and manufactured our initial commercial supply of XHANCE.  We have contracted with a third-party logistics partner and are in the process of finalizing agreements with our distribution partners.

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Brand Awareness.  We have executed a broad, multi-channel awareness campaign leveraging digital, non- personal promotion and journal advertising and have already reached over 10,000 ENT physicians and allergists with disease state and branded messages. In November 2017, we launched a nurse educator team of approximately 85 nurse professionals who have since called on approximately 5,000 ENT physicians and allergists and delivered over 10,000 presentations. The focus of their interactions with healthcare professionals include: (i) introducing Optinose and highlighting the unmet medical need and limitations of current treatments, (ii) increasing awareness about XHANCE along with differentiating the Optinose EDS, and (iii) familiarizing healthcare professionals with the proper administration of XHANCE. Initial reaction to core brand messages among target physicians has been positive.

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Customer Model.  We have defined a sales force footprint of approximately 120 territories targeting approximately 14,000 ENT physicians, allergists and “specialty like” primary care physicians and are deploying a hybrid sales model that combines an internal sales leadership team with a fully dedicated contract sales force to call on our target customer universe. We have prioritized approximately 80 territories within our sales force footprint to deploy at launch based upon an expectation that we will achieve an estimated 65% commercial market access within each of those territories during launch. Most of the initial

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Market Access.  We have been engaging payors with the goal of securing tier 3 commercial coverage, primarily with a single step edit and no prior authorization. We have engaged with approximately 40 plans representing approximately 85% of commercial lives. In meeting with potential payors, we have shared what we believe is our compelling economic value proposition. Our analyses show that XHANCE will have a comparatively low pharmacy budget impact and our clinical trial data suggest that XHANCE may produce an offsetting benefit by helping reduce the rate of surgery with its related costs. For an insurance plan, this could represent a potential overall cost reduction for the population of patients with nasal polyps, as the overall cost of XHANCE could be less than the offsetting costs related to the reduction in surgeries.  During clinical studies, XHANCE was also associated with an improvement in reported work productivity in treated patients, which should be valued by employers and patients. Further, we believe the cost of XHANCE to insurance plans will likely be significantly less than the projected costs of monoclonal antibodies that are currently in development for the treatment of nasal polyps. We expect to achieve approximately 65% coverage of commercial lives during the retail launch of XHANCE, and will seek to increase the number of covered lives during the first year. We have contracted with the Centers for Medicare and Medicaid Services regarding certain government covered lives.  Further, we plan to introduce a co-pay assistance program and other patient affordability programs to appropriately support patient access to XHANCE.

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Infrastructure.  We continue to develop our internal capabilities and grew from 21 employees as of January 1, 2017 to 82 employees as of March 1, 2018 to support a commercial stage company.  We have implemented an enterprise resource planning system to expand our operational and commercial finance capabilities. We have implemented a robust healthcare compliance program to guide our staff’s and our partners' compliance with rules and regulations regarding pharmaceutical sales. In managing our growth, we have remained focused on fostering our One Mission culture.

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Commercialize XHANCE in the ENT and allergy specialty segments in the United States.  We plan to deploy an efficient, go-to-market commercialization model and have completed the build out of our commercial team and organization. Our fully dedicated specialty sales force of approximately 80 territory managers completed training and initiated promotion of XHANCE in early March 2018 to a defined prescriber base of approximately 6,000 ENT and allergy specialists, as well as approximately 2,000 high-decile INS-prescribing primary care physicians. Because we expect to secure broader market access over the next 12 to 18 months, we intend to increase the size of our sales force to approximately 120 territory managers based upon an expanded target audience of approximately 14,000 specialists or specialty-like primary care physicians. Additionally, we expect to target an additional approximately 1,000 physicians through digital and non-personal promotion in areas where we do not have territory managers. We believe these approximately 15,000 physicians treat an estimated 3.5 million chronic rhinosinusitis patients, an estimated 1.2 million of whom have chronic rhinosinusitis with nasal polyps.

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Pursue pipeline development of XHANCE for chronic sinusitis to broaden our market opportunity. We plan to seek a follow-on indication for XHANCE for the treatment of chronic sinusitis. We believe XHANCE would be the first drug therapy product approved for the treatment of chronic sinusitis. In the future, as appropriate, we plan to broaden our marketing to additional primary care physicians that we believe treat an additional estimated 6.25 million patients in the U.S. with chronic rhinosinusitis, an estimated one-third of whom have chronic rhinosinusitis with nasal polyps. In addition, at some point in the future, we intend to consider directing promotional resources to an additional estimated 20 million adult chronic rhinosinusitis sufferers who are not regularly under the care of physicians for this disease using programs such as direct-to-consumer and direct-to-patient promotion.

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Develop a pipeline of additional products focused on the ENT and allergy specialty segments.  We are evaluating the use of the Optinose EDS to deliver other drugs or drug combinations, including antibiotics, anticholinergics, antihistamines, mucolytics, leukotriene inhibitors and other medication classes, to treat diseases primarily managed by ENT and allergy specialists. We also intend to explore complementary drug, diagnostic or device technologies or products to make effective use of our commercial infrastructure. We also plan to evaluate strategic licensing, acquisition, development and commercial partnerships that could increase our commercial efficiencies.

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Explore business development activities for Optinose EDS outside of the ENT and allergy segments.  We are exploring the possibility of using an Optinose EDS to support development of central nervous system treatments, particularly those enabled by nose-to-brain drug delivery. We are in the early stages of clinical development of OPN-300, which combines an Optinose EDS with oxytocin for the treatment of Prader-Willi syndrome and autism spectrum disorder. We are in preclinical development of OPN-021, which combines an Optinose EDS with orexin-A, for the treatment of narcolepsy or symptoms of other diseases potentially amenable to the same pharmacologic activity, such as Parkinson's disease. We intend to evaluate business development activities to capture value through the continued development of these assets.

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Expand XHANCE into international markets.  We have begun an initial assessment of the development and commercialization of XHANCE for markets outside the United States and plan to conduct further strategic evaluation of such markets now that XHANCE has been approved in the United States. We also intend to explore strategic collaboration opportunities in Europe and the rest of the world in order to maximize the commercial potential and the availability of XHANCE to patients.

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Intranasal Steroids.  Multiple published clinical practice guidelines generally recommend topically-acting INS as the first line of prescription therapy for the treatment of chronic rhinosinusitis with and without polyps. As a result, physicians typically prescribe INS nasal sprays or nasal aerosols despite the fact that there are no FDA-approved products for the treatment of chronic sinusitis without nasal polyps. Therefore, the majority of chronic rhinosinusitis sufferers being treated have tried INS. We estimate that physicians in the United States prescribe approximately 17 million INS prescriptions each year for the treatment of chronic rhinosinusitis, which includes, among other INS products, a generic fluticasone propionate nasal spray. Nasonex, or mometasone furoate nasal spray, is currently the only other branded INS approved by the FDA for the treatment of nasal polyps. A generic version of Nasonex, mometasone furoate monohydrate, was approved by the FDA for, among other indications, the treatment of nasal polyps and launched in 2016. Physicians not only prescribe INS as a standalone therapy, but also typically prescribe INS following sinus surgery as some third-party clinical trials suggest that INS treatment can improve symptoms and delay symptom recurrence.

▪	Oral steroids.  Physicians may prescribe oral steroids on an episodic basis to patients who have not received sufficient symptomatic relief from INS. Oral steroids are often effective at treating the underlying inflammation associated with the disease and reducing postoperative scarring, but the benefit is temporary. As inflammation returns, many patients resume INS therapy.

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Other medical management.  Physicians commonly employ a variety of other non-surgical treatments in the medical management of chronic rhinosinusitis, including nasal saline rinses, multi-week courses of antibiotics, leukotriene antagonists, decongestants, aspirin desensitization and antifungals. The recognized limitations of drug deposition with current INS cause some physicians to seek out alternative treatment regimens, such as high doses of locally compounded liquid budesonide in high-volume nasal rinses. Chronic rhinosinusitis is one of the most common reasons for adult outpatient antibiotic use in the United States, comprised of approximately 37 million prescriptions per year.

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Sinus surgery and other procedures.  Physicians generally recommend surgical treatment of chronic rhinosinusitis with and without nasal polyps only after patients fail medical management. The primary surgical alternative is ESS, which attempts to open the sinus drainage pathways while preserving as much bone and sinus tissue lining as possible. The physician typically uses rigid steel instruments and powered cutting tools to remove inflamed tissue, including any nasal polyps, and underlying bone to create a larger passage through the nasal anatomy to the sinuses. At the conclusion of the procedure, patients often have their nasal passages packed with a material that acts as a spacer to prevent surgical adhesions and control bleeding. Patients typically require one or more follow-up debridement treatments in which the physician may remove more tissue, crusting, scabs or scar tissue at the area of surgery in order to keep the sinus drainage pathway open and promote proper healing.

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Limited efficacy of INS treatments using traditional nasal sprays and nasal aerosols.  Although steroids are generally pharmacologically effective, conventional INS, including nasal sprays and nasal aerosols, are unable to effectively and consistently place the steroids onto the primary site of inflammation and nasal polyp origin, high and deep in the nasal passages. These products deposit a majority of the drug in the front of the nose or on the floor of the nasal passages, reducing their effectiveness and leaving many patients without sufficient symptomatic relief.

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Short-term benefits of oral steroids outweighed by significant side effects.  Oral steroids offer only temporary benefit and are limited by the risk of significant systemic side effects associated with both short- and long-term use. These side effects include, among others, weight gain; increased risk of infections; loss of bone mineral density; death of bone tissue; cataract formation; glaucoma; adrenal suppression; and psychiatric complications, including mania, depression, and psychosis.

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Varying degrees of efficacy with other medical management.  Other non-surgical treatments have varying degrees of supporting data and efficacy. In addition, high-volume steroid nasal rinses are difficult to administer, can be costly, may risk systemic side effects due to the absorption of the steroid into the body, can be associated with fluid draining from the nose after the procedure and are difficult for patients to comply with over prolonged courses of outpatient therapy.

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Sinus surgery and other procedures are costly and may not be a complete solution.  The effectiveness of sinus surgery varies significantly and many patients experience persistent or recurrent symptoms. Reports have shown that nasal polyp regrowth following surgery occurs in as high as 60% of cases within four years. In addition, it has been reported that 80% of patients who had surgery within the past two years continued to have symptoms. Because sinus surgery is often not curative and may not address the underlying cause of the inflammation, many patients receive short- and long-term courses of INS after surgery and approximately 20% of patients elect surgical revisions. Postoperative scarring and persistent inflammation are common and can compromise symptom outcomes and also negatively impact the ability of the sinuses to heal. Sinus surgery is also a costly procedure, with estimated costs ranging from $8,500 to $16,000 per procedure. While balloon sinus dilation has the ability to open sinuses in a less invasive manner, it also may not address the underlying cause of the inflammation associated with chronic rhinosinusitis and is costly. Similarly, steroid-releasing sinus implants have limited duration of anti-inflammatory effect, are costly and face reimbursement challenges.

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Potential future biologic monoclonal antibodies treatment may be costly, difficult to administer or have negative side effects. The risks and benefits associated with the use of biologic monoclonal antibodies for the treatment of nasal polyps are not yet fully established. We expect the use of biologic monoclonal antibodies for the treatment of nasal polyps to be costly, with estimated costs of approximately $35,000 per year based on the doses being studied in nasal polyps and the current costs per dose in other indications. These drugs also require subcutaneous injections or intravenous administration that require frequent physician office visits. We believe the systemic nature of these treatments, which target components of the immune response, may result in more adverse side effects than treatments with topically-acting steroids.

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High patient dissatisfaction with current INS treatments.  In a market research study that we commissioned, we surveyed 438 patients with chronic sinusitis with and without nasal polyps. In this study, approximately 80% of the patients reported being frustrated with the symptom relief offered from their current INS medication and approximately 90% of the patients reported they would be interested in using a new product if it would improve symptom relief.

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Strong physician interest in XHANCE product profile.  We surveyed approximately 700 physicians, consisting of 400 ENT and allergy specialists and 300 primary care physicians that currently treat patients with chronic sinusitis with and without nasal polyps. Approximately 75% of these physicians, including both specialists and primary care physicians, agreed, in part, that INS medications do not work well in patients with chronic sinusitis due to their belief that conventional INS do not sufficiently reach the high and deep regions of the nasal passages where inflammation occurs. In addition, 70% to 80% of these physicians reported that they would "definitely" or "probably" prescribe their patients a product with a clinical profile similar to XHANCE.

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Fluticasone propionate is the most widely-prescribed INS in the United States.  XHANCE contains fluticasone propionate, a potent, well-characterized, second-generation, anti-inflammatory corticosteroid with a low bioavailability, meaning that only a small percentage of the drug is absorbed into the body. Corticosteroids provide multiple anti-inflammatory mechanisms of action and are used in forms such as pills, creams, inhalers and nasal sprays, to treat many sites of inflammation.

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XHANCE was designed to overcome the limitations of current INS therapies by delivering medication high and deep in the nasal passages. In multiple studies utilizing advanced imaging, an Optinose EDS produced a differentiated pattern of drug delivery with significant drug deposited at the primary site of inflammation high and deep in the nasal passages where nasal polyps or inflamed and swollen membranes produce nasal symptoms and can obstruct normal sinus ventilation and drainage.

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Strong clinical data demonstrating safety and efficacy.  In two randomized, double-blinded, placebo-controlled Phase 3 pivotal clinical trials evaluating adult patients with nasal polyps, we met our co-primary endpoints of statistically significant reductions of nasal congestion/obstruction symptoms and total polyp grade. XHANCE also produced treatment benefits in all four defining symptoms of chronic rhinosinusitis, as well as in polyp elimination, quality of life measures, need for sinus surgery and patient global impression of change. In two supportive open-label Phase 3 clinical trials evaluating approximately 900 patients with symptoms of chronic sinusitis with and without nasal polyps for a period of up to one year, XHANCE was generally well tolerated. In these supportive trials, we observed comparable symptom improvements in patients with and without nasal polyps and continuing incremental polyp reduction and symptom improvement through 12 months.

▪	XHANCE is easy to use.  In a market study that we commissioned, 98% of patients reported that XHANCE was easy to use after four weeks of use and 93% stated the ease of use was comparable to other INS.

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Potential for broad payor access.  In a market research study that we commissioned, we surveyed 26 health insurance plans representing over 150 million covered lives. Most payors reacted positively to a profile of XHANCE with respect to its product design, mechanism of action and efficacy results based upon our clinical data. This research further suggested that market access for XHANCE will be dependent on XHANCE's pricing. A majority of payors surveyed in our study indicated that they do not intend to actively manage INS products priced below a certain dollar threshold and many surveyed payors indicated that they would provide access without prior authorization to INS products priced within a certain dollar range. The surveyed payors reported the following potential coverage based on the XHANCE profile: (i) no step edits

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Cost-Effective Solution.  We have priced XHANCE comparably to the only other branded INS that is approved to treat nasal polyps, but at a price higher than generic INS products. We believe XHANCE will offer a cost-effective, clinical benefit to payors when compared to surgery and expensive monoclonal antibodies and that this benefit will reduce the perceived need for multiple step-edits and prior authorizations, which we believe will increase the likelihood of successful commercial adoption of XHANCE.

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Efficient entry in the ENT and Allergy specialty segments:  We plan to deploy an efficient, go-to-market commercialization model and have completed the build out of our commercial team and organization. Our fully dedicated specialty sales force of approximately 80 territory managers completed training and initiated promotion of XHANCE in early March 2018 to a defined prescriber base of approximately 6,000 ENT and allergy specialists, as well as approximately 2,000 high-decile INS-prescribing primary care physicians. Because we expect to secure broader market access over the next 12 to 18 months, we intend to increase the size of our sales force to approximately 120 territory managers based upon an expanded target audience of approximately 14,000 specialists or specialty like primary care physicians. Additionally, we expect to target an additional approximately 1,000 physicians through digital and non-personal promotion in areas where we do not have territory managers. We believe these approximately 15,000 physicians treat an estimated 3.5 million chronic rhinosinusitis patients, an estimated 1.2 million of whom have chronic rhinosinusitis with nasal polyps.

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Facilitate broader adoption:  We intend to pursue a follow-on indication of XHANCE for the treatment of chronic sinusitis. Upon approval for the follow-on indication, we intend to broaden our commercialization efforts to target primary care physicians that we believe treat an additional estimated 6.25 million U.S. patients with chronic rhinosinusitis, an estimated one-third of whom have chronic rhinosinusitis with nasal polyps. We may target these physicians through a commercial partnership.

▪	Activate patient demand:  At some point in the future, we intend to consider directing promotional resources to an additional estimated 20 million chronic rhinosinusitis sufferers who are not regularly under the care of physicians for this disease using programs such as direct-to-consumer and direct-to-patient promotion.

▪	Define a clear patient type for XHANCE.  We intend to focus on moderate-to-severely symptomatic patients who have not achieved satisfactory results with currently available INS.

▪	Establish a compelling brand position in the medical continuum of care.  In an effort to establish our brand position within the continuum of care, we intend to, among other things, educate physicians, payors and patients on XHANCE's unique mechanism of action and differentiated efficacy profile.

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Develop a meaningful payor-friendly value proposition.  We intend to establish a meaningful value proposition for physicians, payors and patients by highlighting the potential for XHANCE to reduce or delay the need for surgical intervention, reduce antibiotic prescribing and increase patient satisfaction with treatment outcomes. We believe the health economic data related to XHANCE are compelling.  Our analyses show that XHANCE will have a comparatively low pharmacy budget impact and our clinical trial data suggest that XHANCE may produce an offsetting benefit by helping reduce the rate of surgery with its related costs. For an insurance plan, this could represent a potential overall cost reduction for the population of patients with chronic rhinosinusitis with nasal polyps, as the overall cost of XHANCE would be less than the offsetting costs related to the reduction in surgeries.  During clinical studies, XHANCE was also associated with an improvement in reported work productivity in treated patients, which should be valued by employers and patients.  Further, we believe the cost of XHANCE to insurance plans will likely be significantly less than the projected costs of monoclonal antibodies that are currently in development for the treatment of nasal polyps.

▪	Drive awareness, adoption and access.  We are engaging with physicians and payors to educate both constituencies about XHANCE and its benefits, with the goal of securing broad market access for the expected availability of XHANCE through retail pharmacies in early April 2018.

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Physicians:  We are utilizing a clinical nurse educator team to target ENT and allergy specialists to (i) introduce us and highlight the unmet medical need and limitations of current treatments, (ii) increase awareness about XHANCE along with differentiating the EDS and (iii) familiarize healthcare professionals with the proper administration of XHANCE. In addition, beginning in early March 2018 our dedicated sales force started to introduce the XHANCE Xperience program to select physicians.

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Payors:  We are engaging with payors prior to launch with the objective of securing broad market access in the commercial segment by targeting Tier 3 payor coverage, single step edit with no prior authorization. Specifically, we are targeting pharmaceutical benefit managers, national plans and regional plans representing, in the aggregate, up to approximately 160 million of the estimated 180 million U.S. covered commercial lives.

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Patients:  We are building a patient and physician support infrastructure in an effort to accelerate physician adoption and reduce the risk of patient abandonment during the fulfillment process. We expect that this infrastructure may include (i) patient samples, (ii) a co-pay assistance program for patients who have commercial coverage, (iii) savings cards for cash payors, (iv) reimbursement support programs for the retail channel, (v) a "specialized" distribution channel to assist patients with the complexities of the payor landscape, and (vii) a patient assistance program to provide access to XHANCE to people who have no or inadequate insurance.

▪	Drive product awareness and appreciation of the clinical differentiation of XHANCE

◦	Executed broad multi-channel awareness campaign leveraging digital, non-personal promotion and journal advertising and have already reached over 10,000 ENT and allergists

◦	Launched approximately 85 person nurse educator team calling on a universe of about 7,000 ENT and allergists. This team has reached approximately 5,000 ENT and allergy prescribers and delivered approximately 10,000 presentations to their target audience. Initial reaction to core brand messages among target physicians has been positive.

◦	Finalized XHANCE core marketing strategies and launch tactic including a compliant, value optimizing and cost-effective promotion mix to appropriately engage our target audience

◦	Introduced the XHANCE Xperience program to select physicians in early March 2018. This program will offer these physicians and their patients an opportunity to gain initial experience with XHANCE

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▪	Design and deploy our customer facing model

◦	Designed hybrid sales model that leverages a fully dedicated contract sales organization reporting into an Optinose Sales Leadership Team

◦	Defined footprint of approximately 120 territories that will ultimately target approximately about 14,000 ENTs, allergists and “specialty like” primary care physicians

◦	Recruited, hired and trained 11 Optinose Regional Business Leaders with an average of approximately 11 years of sales leadership experience

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In partnership with our contract sales organization, approximately 80 Territory Managers, or TMs, were recruited, hired and trained. The TMs have an average of 13 years of pharmaceutical sales experience and over 70% have experience in the respiratory therapeutic category. The TMs were deployed in early March 2018 in geographies where we expect to have greater than 65% coverage of commercial lives during launch.

▪	Engage commercial payors with the objective of securing tier 3 commercial coverage

◦	Developed compelling economic value proposition

◦	Created value pack, budget impact model, supporting health economics and outcomes research, or HEOR, payor messages and payor partnership models

◦	Completed pricing study to inform pricing decision and contracting strategy and will launch with a Wholesaler Acquisition Cost, or WAC, of $425 per unit of XHANCE

◦	Created HEOR-related communication tools for use with payors

◦	Completed development of our clinical and economic evidence of pharmaceuticals in support of formulary consideration using the Academy of Managed Care Pharmacy, or AMCP, Dossier format

◦	Engaged with approximately 40 plans representing approximately 85% of commercial lives

◦	Intend to introduce co-pay assistance program and other patient affordability programs to appropriately support patient access to XHANCE

▪	two randomized, double-blinded, placebo-controlled Phase 3 pivotal clinical trials designed to compare the safety and efficacy of XHANCE to a placebo EDS in adults with bilateral nasal polyps, which we refer to as NAVIGATE I and NAVIGATE II or collectively, our pivotal clinical trials;

▪	two open-label Phase 3 clinical trials to evaluate the safety of XHANCE in adults with symptoms of chronic sinusitis with or without nasal polyps, which we refer to as EXHANCE-3 and EXHANCE-12 or collectively, our supportive clinical trials; and

▪	one Phase 1, open-label, randomized, single-dose, bioavailability study to compare the bioavailability of fluticasone propionate from XHANCE to Flonase and Flovent HFA in healthy patients and patients with mild-to-moderate asthma.

▪	In our pivotal clinical trials, XHANCE produced statistically significant benefits on both of the co-primary endpoints: a reduction of nasal congestion/obstruction symptoms at week 4 and a reduction in total polyp grade at week 16.

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▪	Patients with nasal polyps generally experienced greater improvements in symptoms and reductions in polyp grade with longer duration of use.

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In our pivotal clinical trials, approximately 16% of patients treated with XHANCE had nasal polyps eliminated in at least one nostril after 16 weeks of treatment, and approximately 27% had nasal polyps eliminated in at least one nostril after an additional eight weeks of treatment. In our supportive clinical trials, we observed complete response rates in at least one nostril of 48% of patients in EXHANCE-3 and 47.1% of patients in EXHANCE-12.

▪	In our pivotal clinical trials, XHANCE produced improvement across all four defining symptoms of chronic rhinosinusitis.

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Over 85% of patients receiving XHANCE across our pivotal clinical trials reported improvement, and approximately two-thirds reported being "much" or "very much" improved, compared to approximately one-third of patients in the placebo EDS group. In our supportive clinical trials, approximately 70% of patients with symptoms of chronic sinusitis, both with and without nasal polyps, reported that they were "much" or "very much" improved after treatment with XHANCE.

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On a Sinonasal Outcome Test-22, the improvement with the 186- and 372-microgram, or mcg, doses of XHANCE was superior to the placebo EDS in both NAVIGATE I and NAVIGATE II. The magnitude of improvement associated with treatment with XHANCE was approximately 20 points. Although cross-trial comparisons have significant limitations and must be interpreted with caution, in a previous third-party study evaluating a large cohort (n=1468) of patients who were underwent sinus surgery, the degree of change on this outcome measure was approximately 18 points.

▪	After 12 months of treatment with XHANCE in our supportive clinical trials, at least 50% of patients had a Sinonasal Outcome Test-22 score that was at or below 9.3, which is the average score that has been reported for healthy individuals.

▪	XHANCE was well tolerated and had an adverse event profile generally similar to that observed in several comparably designed third party studies, including those of mometasone furoate in nasal polyps patients and of fluticasone propionate formulations in polyposis and allergic rhinitis patients.

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(1)	The p-value, or probability value, is a measure of statistical significance reflecting the likelihood that an observed result occurred by chance.

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Sinonasal Outcome Test-22.  In a Sinonasal Outcome Test-22, which broadly assesses the impact of nasal polyps on certain outcomes, including the symptoms of nasal polyps, functioning and quality of life, the change observed with the 186- and 372-mcg doses of XHANCE was superior to the placebo EDS in both of the pivotal clinical trials. The magnitude of improvement associated with treatment with XHANCE was approximately 20 points.

▪	Quality of Sleep.  A positive impact of XHANCE on sleep was shown for the 372-mcg dose in both pivotal clinical trials through the "Sleep" sub-scale of the Sinonasal Outcome Test-22 and, in NAVIGATE II, a positive effect was further shown across a number of the sub-scales of the MOS-Sleep-R, a validated set of measures commonly used in clinical studies to assess changes in sleep quality.

▪	Defining Symptoms.  The 186- and 372-mcg treatment groups, in pooled data for NAVIGATE I and NAVIGATE II, achieved statistically significant improvement in all four of the core defining symptoms of nasal polyps at the end of the double-blinded phase.

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Patient Global Impression of Change.  Patient global impression of change is a summary measure of treatment benefit from the perspective of the patient measuring their perception of improvement or worsening of their condition. At the end of the double-blinded phase, the percentage of patients who were improved was substantially higher with XHANCE compared with the placebo EDS. Of the patients receiving 186 or 372 mcg of XHANCE, 86% reported improvement combined across both pivotal clinical trials, and 65.9% reported being "much" or "very much" improved. A post-hoc analysis of a subgroup of patients in the NAVIGATE I and II trials who were using a marketed INS at the time of study entry showed similar results, with 65% of patients treated with 186 or 372 mcg of XHANCE reporting being "much" or "very much improved" after 16 weeks of treatment compared with 28% of patients treated with the placebo EDS.

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Need for Surgery.  Surgical eligibility was assessed using standardized criteria defined prior to trial initiation. Surgery was not necessarily planned or pending for these patients. The proportion of patients considered eligible for surgery among the 186-mcg and 372-mcg dose groups combined across both pivotal trials was reduced by 54% after 16 weeks of treatment with XHANCE versus 36% with the EDS-placebo group and was reduced by approximately 64% after the additional eight weeks of active treatment with the 372-mcg dose.

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Complete Response Analysis.  The polyp grading scale is neither linear nor a direct measure of polyp mass, making it difficult to interpret mean change scores. Therefore, we also performed a complete response analysis to evaluate the percentage of patients who had nasal polyps eliminated on at least one side of the nasal passages. The percentage of patients who had nasal polyps eliminated on at least one side of the nasal passages at the end of the double-blinded phase was 14.1% in the 186- and 372-mcg dose groups combined across both pivotal clinical trials, compared to 7.8% of placebo EDS recipients. By the end of 24 weeks, after all patients received up to an additional eight weeks of active treatment with the 372-mcg dose, the complete response rate was 17.3% in patients previously treated with the placebo EDS compared

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On the Lund-Mackay scale, which is an endoscopic objective assessment of disease in the nasal passages, scores for edema, nasal discharge and nasal polyps decreased through up to 12 months of treatment, with similar benefits observed in patients who did or did not have nasal polyps at baseline. Among those patients entering the clinical trials with endoscopic evidence of edema within the nasal cavity, approximately 35% with polyps and 53% without polyps in EXHANCE-3 and 50% with polyps and 56% without polyps in EXHANCE-12 no longer had observable edema by the end of the study.

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Patients with nasal polyps experienced improvement in nasal polyp grades. As observed in the pivotal clinical trials, mean nasal polyp grading scale scores improved more with longer durations of treatment. In addition, the percentage of nasal polyp patients with a polyp grade of 0 on at least one side of the nose was 47.1% in EXHANCE-12 and 48.0% in EXHANCE-3 by the end of their participation in the study.

▪	Mean total Sinonasal Outcome Test-22 scores improved throughout both supportive clinical trials. After 12 months of treatment with XHANCE in our supportive clinical trials, at least 50% of patients had a score that was at or below 9.3, which is the average score that has been reported for healthy individuals.

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Strong patent protection.  Our XHANCE U.S. patent portfolio consists of nine issued device and method of use patents expiring through 2030, three issued design patents expiring through 2030 and U.S. patent applications that, if granted, would expire through 2034. We rely primarily on the protections afforded by device and method of use patents. Our issued U.S. patents and patent applications for XHANCE are based on an Optinose EDS, including the combination of this technology with fluticasone propionate.

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Complex drug-delivery system.  We believe the unique features of an Optinose EDS, as well as its delivery of a topical-acting corticosteroid, affords us significant protection against generic competition, as well as against a potential 505(b)(2) NDA, that seeks to reference XHANCE in order to obtain approval for a therapeutically equivalent, substitutable competitor product. XHANCE, utilizing our proprietary EDS, presents human factors engineering complexities for drug-device combination products and chemistry, manufacturing and controls challenges unique to suspension and respiratory products. Any future substitutable generic entrant will need to have considerable combination product know-how to develop and validate a substitutable drug delivery device or technology to compete with an Optinose EDS.

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Clinical and regulatory complexity.  We have conducted a clinical development program comprised of over 1,500 patients to support our NDA for XHANCE to treat nasal polyps, including human factors studies and Phase 3 clinical trial assessments evaluating and validating the use of an Optinose EDS. As with other drugs that primarily have local activity, we believe the regulatory pathway for products seeking approval as substitutable generic equivalents to XHANCE will be more complex and costly than the pharmacokinetic studies generally required for systemically-acting medications. We believe current FDA guidance for substitutable INS generally requires the demonstration of "clinical bioequivalence," which has caused developers to conduct non-inferiority clinical trials. Clinical trials in nasal polyps are different from those that have been performed to support approval of generic INS for allergic rhinitis. We believe potential generic competitors to XHANCE must not only demonstrate efficacy versus placebo, but must also show equivalent efficacy and safety outcomes to establish clinical bioequivalence to XHANCE, requiring a significant amount of time and capital investment and presenting clinical development uncertainties.

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▪	Three-year regulatory exclusivity.  The FDA has granted XHANCE a three-year period of regulatory exclusivity that will end in September 2020. This exclusivity means that we are afforded at least three years in which to market our product free of generic or 505(b)(2) competition post-NDA approval.

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In July 2017, we entered into a supply agreement with Hovione Inter Ltd, or Hovione, for the supply of fluticasone propionate, the active pharmaceutical ingredient included in the liquid suspension formulation. This agreement has a term of five years from commercial launch of XHANCE, subject to earlier termination or extension in accordance with the terms of the agreement. Either we or Hovione may terminate the agreement prior to that date for uncured material breach or insolvency of the other party. We may also terminate the agreement in the event Hovione, among other things, (i) loses any required FDA approval rendering it unable to fulfill its contractual obligations, (ii) is engaged in felonious or fraudulent activities or (iii) does not submit a Corrective and Preventive Action plan to the FDA within a specified period of time of being notified of deficiencies in Hovione's facility.

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In August 2017, we entered into a manufacture and supply agreement with Contract Pharmaceuticals Limited Canada, or CPL, for the formulation and assembly of the finished drug product during the fill/pack operation. This agreement has a term of five years from the date on which we provide a purchase order for validation batches to CPL, subject to earlier termination or extension in accordance with the terms of the agreement. Either we or CPL may terminate the agreement prior to that date by mutual consent or for uncured material breach by or insolvency of the other party. We may also terminate the agreement if, among other things, any intellectual property of any third party is reasonably alleged by a third party to be infringed, misappropriated or otherwise violated by the manufacture, import, use, sale or distribution of XHANCE or if any regulatory authority requires us to cease production of the sale of XHANCE.

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In August 2017, we entered into a manufacturing services agreement with Ximedica, LLC for the manufacture of the liquid delivery sub-assembly, which consists of injection molded parts and other purchased components. This agreement has a term of two years from September 18, 2017, subject to earlier termination in accordance with the terms of the agreement. Either we or Ximedica may terminate the agreement prior to that date for uncured material breach or insolvency of the other party. We may also terminate the agreement for any reason upon prior written notice or if Ximedica (i) fails an inspection or suffers a disciplinary action by a governmental authority and fails to cure such issue within a specified period of time or (ii) fails to gain recommendation for approval by the FDA to manufacture the liquid delivery subassembly component to be manufactured pursuant to the agreement.

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Phase 1 clinical trials involve the initial administration of the investigational drug to humans, typically to a small group of healthy human patients, but occasionally to a group of patients with the targeted disease or disorder. Phase 1 clinical trials generally are intended to determine the metabolism and pharmacologic actions of the drug, the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.

▪	Phase 2 clinical trials generally are controlled studies that involve a relatively small sample of the intended patient population, and are designed to develop initial data regarding the product's effectiveness, to determine dose response and the optimal dose range, and to gather additional information relating to safety and potential AEs.

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Phase 3 clinical trials are conducted after preliminary evidence of effectiveness has been obtained, and are intended to gather the additional information about safety and effectiveness necessary to evaluate the drug's overall risk-benefit profile, and to provide a basis for physician labeling. Generally, Phase 3 clinical development programs consist of expanded, large-scale studies of patients with the target disease or disorder to obtain statistical evidence of the efficacy and safety of the drug at the proposed dosing regimen.

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▪	begin to commercialize XHANCE and further scale up external manufacturing and distribution capabilities to commercialize XHANCE or any other product candidate for which we may obtain regulatory approval;

▪	adapt our regulatory compliance efforts to incorporate requirements applicable to marketed drugs;

▪	continue clinical development activities for XHANCE, including the U.S. Food and Drug Administration, or FDA, mandated pediatric studies, and seek regulatory approval for XHANCE for a follow-on indication for the treatment of chronic sinusitis;

▪	seek to discover and develop, in-license or acquire additional products, product candidates and technology;

▪	maintain, expand and protect our intellectual property portfolio;

▪	hire additional commercial, clinical, manufacturing and scientific personnel;

▪	add operational, financial and management information systems and personnel, including personnel to support commercialization efforts; and

▪	incur additional legal, accounting and other expenses in operating as a public company.

▪	our ability to successfully commercialize XHANCE for the treatment of nasal polyps;

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▪	our ability to successfully complete required clinical trials and submit a supplemental new drug application to the FDA and obtain regulatory approval for XHANCE for the treatment of chronic sinusitis;

▪	our ability to complete and submit applications to, and obtain regulatory approval from, foreign regulatory authorities, if we choose to commercialize XHANCE outside the United States;

▪	the size of the markets in the territories for which we gain regulatory approval;

▪	the performance of our contract sales organization in marketing and promoting XHANCE;

▪	our ability to develop a commercial organization capable of sales, marketing and distribution for XHANCE and any of our other product candidates for which we may obtain marketing approval;

▪	our ability to maintain commercially reasonable agreements with wholesalers, distributors and other third parties in our supply chain;

▪	our success in establishing a commercially viable price for our products;

▪	our success in defending against potential generic competition and other developments in our market generally;

▪	our ability to manufacture commercial quantities of our products at acceptable cost levels;

▪	our ability to obtain coverage and adequate reimbursement from third parties, including government payors; and

▪	our ability to successfully complete development activities, including the necessary clinical trials, with respect to our other product candidates.

•	the success of our commercialization of XHANCE for the treatment of nasal polyps including, among other things, patient and physician acceptance of XHANCE and our ability to obtain adequate coverage and reimbursement for XHANCE;

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▪	the cost and timing of commercialization activities for XHANCE, including product manufacturing, marketing, sales and distribution;

▪	revenue received from commercial sales of XHANCE;

▪	our clinical development plans for XHANCE, including FDA-mandated pediatric studies and clinical trials for the follow-on indication for the treatment of chronic sinusitis;

▪	the outcome, timing and cost of the regulatory approval process of XHANCE for chronic sinusitis by the FDA, including the potential for the FDA to require that we perform more studies and clinical trials than those that we currently expect;

▪	the costs involved in preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and;

▪	the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us;

▪	potential future licensing revenue from the AVP-825 License Agreement;

▪	fluctuations in the three-month LIBOR-based floating interest rate of our senior secured notes;

▪	the initiation, progress, timing, costs and results of clinical trials for our other product candidates; and

▪	the extent to which we in-license or acquire other products, product candidates or technologies.

▪	seek strategic collaborations to assist in the commercialization of XHANCE in the United States and other markets;

▪	significantly delay, scale back or discontinue the development of XHANCE for the treatment of chronic sinusitis;

▪	relinquish or license on unfavorable terms our rights to an Optinose EDS technology or other product candidates that we otherwise would seek to develop or commercialize ourselves;

▪	delay, limit, reduce or terminate the drug development of our current or future product candidates, or seek collaborators for one or more of our current or future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; or

▪	significantly curtail our operations.

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•	our default in a payment obligation under the Notes;

•	our breach of the restrictive covenants or other terms of the Notes;

•	our breach of reporting obligations;

•	our failure to properly maintain the collateral; and

•	certain specified insolvency and bankruptcy-related events.

•	sell, transfer, lease or dispose of our assets;

•	create, incur or assume additional indebtedness;

•	encumber or permit liens on certain of our assets;

•	make restricted payments, including paying dividends on, repurchasing or making distributions with respect to our common stock;

•	make specified investments (including loans and advances);

•	consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

•	enter into certain transactions with our affiliates;

•	grant certain license rights related to our products, technology and other intellectual property rights; and

•	permit our cash and cash equivalents held in certain deposit accounts to be less than $10,000,000 at any time.

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▪	our ability to manufacture commercial quantities of XHANCE at a reasonable cost and with sufficient speed to meet commercial demand;

▪	our ability to manage our third-party sales organization to market, promote and sell XHANCE;

▪	our success in educating physicians, patients and caregivers about the benefits, administration and use of XHANCE;

▪	the availability, perceived advantages, relative cost, relative safety and relative efficacy of competing products;

▪	the availability of coverage and adequate reimbursement for XHANCE;

▪	our ability to contract with wholesalers and/or specialty pharmaceutical distributors on acceptable terms;

▪	the effectiveness of our marketing campaigns;

▪	our effective use of promotional resources;

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▪	a continued acceptable safety profile for XHANCE;

▪	our ability to obtain and maintain appropriate state licenses in the states in which we intend to sell XHANCE; and

▪	our ability to successfully defend any challenges to our intellectual property relating to XHANCE.

▪	demonstration of clinical safety and efficacy;

▪	relative convenience and ease of administration;

▪	pricing and cost-effectiveness;

▪	availability of alternative treatments and perceived advantages over such alternative treatments;

▪	the clinical indications for which XHANCE is approved;

▪	the prevalence and severity of any AEs;

▪	restrictions placed on XHANCE in connection with its approval;

▪	limitations or warnings contained in the FDA-approved label for XHANCE;

▪	the effectiveness of our or any future collaborators' sales and marketing strategies;

▪	consolidation among healthcare providers, which increases the impact of the loss of any relationship;

▪	our ability to obtain and maintain sufficient third-party coverage and adequate reimbursement; and

▪	the willingness of patients to pay out-of-pocket in the absence of third-party coverage.

▪	a covered benefit under its health plan;

▪	appropriate and medically necessary for the specific condition or disease;

▪	cost effective; and

▪	neither experimental nor investigational.

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▪	we may be forced to suspend marketing of XHANCE;

▪	the FDA may withdraw its approval of XHANCE or impose restrictions on its distribution;

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▪	the FDA may require additional warnings or contradictions in the label that could diminish the usage or otherwise limit the commercial success of XHANCE;

▪	we may be required to conduct additional post-marketing studies;

▪	we could be sued and held liable for harm caused to patients; and

▪	our reputation may suffer.

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▪	issue a warning letter asserting that we are in violation of the law;

▪	seek an injunction or impose civil or criminal penalties or monetary fines;

▪	suspend, modify or withdraw regulatory approval;

▪	suspend any ongoing clinical trials;

▪	refuse to approve a pending NDA or a pending application for marketing authorization or supplements to an NDA or to an application for marketing authorization submitted by us;

▪	seize our product candidate; and/or

▪	refuse to allow us to enter into supply contracts, including government contracts.

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the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order, or arranging for or recommending the purchase, lease or order of, any good or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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the U.S. civil False Claims Act (which can be enforced through "qui tam," or whistleblower actions, by private citizens on behalf of the federal government), prohibits any person from, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment of government funds or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the U.S. federal government;

▪	the U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or

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state laws and regulations, including state anti-kickback and false claims laws, that may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities; and

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the Physician Payments Sunshine Act, implemented as the Open Payments program, and its implementing regulations, requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children's Health Insurance Program to report annually to CMS information related to certain payments made in the preceding calendar year and other transfers of value to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

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▪	an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs or biologic agents;

▪	an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;

▪	expansion of healthcare fraud and abuse laws, including the U.S. civil False Claims Act and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;

▪	a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for a manufacturer's outpatient drugs to be covered under Medicare Part D;

▪	extension of manufacturers' Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

▪	a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected;

▪	expansion of eligibility criteria for Medicaid programs;

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▪	expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

▪	requirements to report certain financial arrangements with physicians and teaching hospitals;

▪	a requirement to annually report certain information regarding drug samples that manufacturers and distributors provide to physicians; and

▪	a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

▪	decreased demand for XHANCE;

▪	injury to our reputation and significant negative media attention;

▪	termination of clinical trial sites or entire trial programs that we conduct in the future relating to XHANCE or our other product candidates;

▪	withdrawal of clinical trial participants from any future clinical trial relating to XHANCE or our other product candidates;

▪	significant costs to defend the related litigation;

▪	substantial monetary awards to patients;

▪	loss of revenue;

▪	diversion of management and scientific resources from our business operations; and

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▪	an increase in product liability insurance premiums or an inability to maintain product liability insurance coverage.

▪	the FDA may not accept our NDA filing;

▪	the FDA may disagree with the design, scope or implementation of our clinical trials;

▪	we may be unable to demonstrate to the satisfaction of the FDA that a product candidate is safe and effective for its proposed indication;

▪	we may be unable to demonstrate that a product candidate's clinical and other benefits outweigh its safety risks;

▪	the FDA may disagree with our interpretation of data from preclinical studies or clinical trials;

▪	the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA;

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▪	the FDA may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and

▪	the approval policies or regulations of the FDA may change in a manner rendering our clinical data insufficient for approval.

▪	inability to raise funding necessary to initiate or continue a clinical trial;

▪	delays in obtaining regulatory approval to commence a clinical trial;

▪	delays in reaching agreement with the FDA or foreign regulatory authorities on final trial design or the scope of the development program;

▪	imposition of a clinical hold following an inspection of our clinical trial operations or trial sites by the FDA or foreign regulatory authorities;

▪	delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites;

▪	delays in obtaining required institutional review board, or IRB, approval;

▪	delays in recruiting suitable patients to participate in a clinical trial;

▪	patients' delays or failure to complete participation in a clinical trial or return for post-treatment follow-up;

▪	clinical sites dropping out of a clinical trial;

▪	time required to add new clinical sites; or

▪	delays by our contract manufacturing organizations, or CMOs, to produce and deliver a sufficient supply of clinical trial materials.

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our CMOs, or other third parties we rely on, may encounter difficulties in achieving the volume of production needed to satisfy commercial demand, may experience technical issues that impact quality or compliance with applicable and strictly enforced regulations governing the manufacture of pharmaceutical products, and may experience shortages of qualified personnel to adequately staff production operations;

▪	our wholesalers and distributors could become unable to sell and deliver XHANCE for regulatory, compliance and other reasons;

▪	our CMOs, wholesalers and distributors could default on their agreements with us to meet our requirements for commercial supply of XHANCE;

▪	our CMOs, wholesalers and distributors may not perform as agreed or may not remain in business for the time required to successfully produce, store, sell and distribute our products and we may incur additional cost; and

▪	if our CMOs, wholesalers and distributors were to terminate our arrangements or fail to meet their contractual obligations, we may be forced to delay our commercial programs.

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▪	managing the commercialization XHANCE and any other products for which we obtain marketing approval;

▪	overseeing our preclinical studies and clinical trials effectively;

▪	identifying, recruiting, maintaining, motivating and integrating additional employees, including any sales and marketing personnel engaged in connection with the commercialization of any approved product;

▪	managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors and other third parties; and

▪	improving our managerial, development, operational and financial systems and procedures.

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▪	properly identify and anticipate ENT and allergy physician and patient needs;

▪	develop, obtain necessary regulatory clearances or approvals, and introduce new product candidates or product enhancements in a timely manner;

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▪	demonstrate, if required, the safety and efficacy of new product candidates with data from preclinical studies and clinical trials;

▪	avoid infringing upon the intellectual property rights of third parties;

▪	comply with all regulations relating to the marketing of new product candidates, including any new or modified EDS technologies; and

▪	provide adequate training to potential users of our product candidates.

▪	FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA;

▪	manufacturing standards;

▪	federal and state healthcare fraud and abuse laws and regulations; or

▪	laws that require the true, complete and accurate reporting of financial information or data.

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▪	compliance with the laws of the United States, the United Kingdom, Norway, and other countries that apply to our international operations, including import and export legislation;

▪	compliance with foreign data protection laws and regulations in the United Kingdom, Norway and other countries that apply to our international operations;

▪	the complexities and expenses of administering a business abroad;

▪	complications in compliance with, and unexpected changes in, tariffs, trade barriers, price and exchange controls and other foreign regulatory requirements, including potential trade conflicts, changes to trade agreements/treaties, and the implementation of trade restrictions;

▪	instability in economic or political conditions, including inflation, recession and actual or anticipated military conflicts, social upheaval or political uncertainty;

▪	production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;

▪	uncertainties of laws and enforcement relating to the protection of intellectual property or secured technology;

▪	litigation in foreign court systems;

▪	language barriers;

▪	changes in tax laws and regulations in the jurisdictions in which we operate;

▪	compliance with tax, employment, immigration and labor laws, regulations and restrictions for employees living or traveling abroad;

▪	difficulties staffing and managing foreign operations; and

▪	workforce uncertainty in countries where labor unrest is more common than in the United States;

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▪	Others may be able to make drug and device components that are the same as or similar to XHANCE and our other product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed;

▪	We or any of our licensors or collaborators might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed;

▪	We or any of our licensors or collaborators might not have been the first to file patent applications covering certain of our inventions;

▪	Others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

▪	The prosecution of our pending patent applications may not result in granted patents;

▪	Granted patents that we own or have licensed may not cover our products or may be held not infringed, invalid or unenforceable, as a result of legal challenges by our competitors;

▪	With respect to granted patents that we own or have licensed, especially patents that we either acquire or in-license, if certain information was withheld from or misrepresented to the patent examiner, such patents might be held to be unenforceable;

▪	Patent protection on our product candidates may expire before we are able to develop and commercialize the product, or before we are able to recover our investment in the product;

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Our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for such activities, as well as in countries in which we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in markets where we intend to market our product candidates;

▪	We may not develop additional proprietary technologies that are patentable;

▪	The patents of others may have an adverse effect on our business; and

▪	We may choose not to file a patent application for certain technologies, trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.

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▪	our ability to successfully commercialize XHANCE;

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any delay in our regulatory approval or filings for XHANCE for a follow-on indication for the treatment of chronic sinusitis or any other product candidate we may develop, and any adverse development or perceived adverse development with respect to the applicable regulatory authority's review of such filings, including without limitation the FDA's issuance of a "refusal to file" letter, a request for additional information, or a CRL;

▪	the success of competitive products or technologies;

▪	adverse regulatory actions with respect to our product candidates, including the failure to receive regulatory approval, or our competitors' products or product candidates;

▪	actual or anticipated changes in our growth rate relative to our competitors;

▪	announcements by us or our competitors of significant acquisitions or divestitures, strategic collaborations, joint ventures, collaborations or capital commitments;

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▪	the commencement, enrollment or results of planned clinical trials of our product candidates or any future clinical trials we may conduct, or any changes generally in the development status of our product candidates or those of our competitors;

▪	regulatory or legal developments in the United States and other countries;

▪	the outcome of any investigations or regulatory scrutiny of our operations or litigation that may be brought against us;

▪	developments or disputes concerning patent applications, issued patents or other proprietary rights;

▪	the recruitment or departure of key personnel;

▪	the level of expenses related to any of our product candidates or clinical development programs;

▪	actual or anticipated variations in our quarterly operating results;

▪	the number and characteristics of our efforts to in-license or acquire additional product candidates or products;

▪	introduction of new products or services by us or our competitors;

▪	failure to meet the estimates and projections of the investment community or financial guidance that we may otherwise provide to the public;

▪	actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

▪	actual or anticipated changes in estimates as to development timelines that we may provide to the public;

▪	variations in our financial results or those of companies that are perceived to be similar to us;

▪	fluctuations in the valuation of companies perceived by investors to be comparable to us;

▪	share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;

▪	announcement or expectation of additional financing efforts;

▪	sales of our common stock by us, our insiders or our other stockholders;

▪	significant lawsuits, including patent or stockholder litigation;

▪	changes in the structure of healthcare payment systems;

▪	market conditions in the pharmaceutical and biotechnology sectors;

▪	general political, economic, industry and market conditions;

▪	investors' general perception of our company and our business;

▪	publication of research reports about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities or industry analysts; and

▪	other events or factors, many of which are beyond our control.

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▪	delay, defer or prevent a change in control;

▪	entrench our management and/or the board of directors; or

▪	impede a merger, consolidation, takeover or other business combination involving us that other stockholders may desire.

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▪	permit our board of directors to issue up to five million shares of preferred stock, with any rights, preferences and privileges as it may designate, which issuance could result in the loss of voting control by other stockholders;

▪	provide that our board of directors will be classified into three classes with staggered, three-year terms and that, subject to the rights of Avista to remove its respective director nominees with or without cause, directors may only be removed for cause by the affirmative vote of the holders of at least a majority of the voting power of outstanding shares of our capital stock;

▪	subject to any director nomination rights afforded Avista, provide that all vacancies on our board of directors, including as a result of newly created directorships, may, except as otherwise required by law, be filled only by the affirmative vote of a majority of directors then in office, even if less than a quorum;

▪	following the date that Avista ceases to hold a majority of the outstanding shares of our common stock, require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent;

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provide that, with the exception of director nominees submitted by Avista pursuant to our Stockholders Agreement, dated October 2, 2017 with Avista, stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder's notice;

▪	require that the amendment of certain provisions of our certificate of incorporation relating to anti-takeover measures may only be approved by a vote of 662/3% of our outstanding common stock;

▪	require that the amendment of our bylaws be approved by the affirmative vote of a majority of directors then in office or 662/3% of our outstanding common stock entitled to vote thereon;

▪	not provide for cumulative voting rights, thereby allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election; and

▪	provide that special meetings of our stockholders may be called only by the chairman or vice chairman of our board of directors, our chief executive officer, a majority of our board of directors or, for so long as Avista holds a controlling ownership interest in our common stock, by the holders of a majority of our outstanding common stock.

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▪	a limited availability of market quotations for our securities;

▪	reduced liquidity with respect to our securities;

▪	a determination that our shares are a "penny stock," which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares;

▪	a limited amount of news and analyst coverage for our company; and

▪	a decreased ability to issue additional securities or obtain additional financing in the future.

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1.	In March 2017, we issued and sold an aggregate of 1,065,451 shares of our Series D Preferred Stock to certain new and existing investors at a purchase price of $32.85 per share, for aggregate consideration of $35.0 million.

2.	In April 2017 and May 2017, we issued and sold to certain of our existing stockholders an additional 52,127 shares of Series D Preferred Stock at a purchase price of $32.85 per share, for aggregate consideration of $1.7 million.

1.	In September 2015, we issued and sold convertible notes in the aggregate principal amount of $15.0 million. In March 2017, concurrently with our Series D Preferred Stock financing, the notes were converted

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1.	1. On January 23, 2017, we granted a stock option to purchase a total of 158,834 shares of common stock at an exercise price of $5.14 per share to one executive officer pursuant to our 2010 Stock Incentive Plan.

2.	On January 30, 2017, we granted stock options to purchase a total of 144,395 shares of common stock at an exercise price of $5.14 per share to one executive officer pursuant to our 2010 Stock Incentive Plan.

3.	On February 13, 2017, we granted stock options to purchase a total of 20,214 shares of common stock at an exercise price of $5.14 per share to two employees pursuant to our 2010 Stock Incentive Plan.

4.	On February 20, 2017, we granted a stock option to purchase 5,775 shares of common stock at an exercise price of $5.14 per share to one employee pursuant to our 2010 Stock Incentive Plan.

5.	On February 27, 2017, we granted a stock option to purchase 5,775 shares of common stock at an exercise price of $5.14 per share to one employee pursuant to our 2010 Stock Incentive Plan.

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•	approximately $7.7 million to support the planned launch of XHANCE, including investments in marketing and sales, inventory and our commercial infrastructure;

•	approximately $1.7 million to fund further development efforts for XHANCE; and

•	approximately $4.4 million to fund other working capital and general corporate purposes, including costs of operating as a public company.

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(1)	Working capital is calculated as current assets minus current liabilities.

•	Commercial Supply Chain.  We have entered into commercial supply agreements with our key suppliers, spent significant time with our suppliers to oversee product production and quality management, and

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Brand Awareness.  We have executed a broad, multi-channel awareness campaign leveraging digital, non- personal promotion and journal advertising and have already reached over 10,000 ENT physicians and allergists with disease state and branded messages. In November 2017, we launched a nurse educator team of approximately 85 nurse professionals who have since called on approximately 5,000 ENT physicians and allergists and delivered over 10,000 presentations. The focus of their interactions with healthcare professionals include: (i) introducing Optinose and highlighting the unmet medical need and limitations of current treatments, (ii) increasing awareness about XHANCE along with differentiating the Optinose EDS, and (iii) familiarizing healthcare professionals with the proper administration of XHANCE. Initial reaction to core brand messages among target physicians has been positive.

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Customer Model.  We have defined a sales force footprint of approximately 120 territories targeting approximately 14,000 ENT physicians, allergists and “specialty like” primary care physicians and are deploying a hybrid sales model that combines an internal sales leadership team with a fully dedicated contract sales force to call on our target customer universe. We have prioritized approximately 80 territories within our sales force footprint to deploy at launch based upon an expectation that we will achieve an estimated 65% commercial market access within each of those territories during launch. Most of the initial 80 territory managers have completed training and are already engaging approximately 8,000 ENTs, allergists and primary care physician targets to promote XHANCE for the treatment of nasal polyps. Additionally, in March 2018, we introduced the XHANCE Xperience program to offer select physicians and their patients an opportunity to gain initial experience with XHANCE. Physicians can enroll a limited number of eligible patients in this program. Patients will receive up to two XHANCE prescriptions at no cost to them ($0 co-pay), and physicians will receive an opportunity for feedback on patient experience. We believe the positive experience that physicians and patients have with XHANCE in this program will help drive demand for XHANCE during the retail launch, starting in early April 2018.

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Market Access.  We have been engaging payors with the goal of securing tier 3 commercial coverage, primarily with a single step edit and no prior authorization. We have engaged with approximately 40 plans representing approximately 85% of commercial lives. In meeting with potential payors, we have shared what we believe is our compelling economic value proposition. Our analyses show that XHANCE will have a comparatively low pharmacy budget impact and our clinical trial data suggest that XHANCE may produce an offsetting benefit by helping reduce the rate of surgery with its related costs. For an insurance plan, this could represent a potential overall cost reduction for the population of patients with nasal polyps, as the overall cost of XHANCE could be less than the offsetting costs related to the reduction in surgeries.  During clinical studies, XHANCE was also associated with an improvement in reported work productivity in treated patients, which should be valued by employers and patients. Further, we believe the cost of XHANCE to insurance plans will likely be significantly less than the projected costs of monoclonal antibodies that are currently in development for the treatment of nasal polyps. We expect to achieve approximately 65% coverage of commercial lives during the retail launch of XHANCE, and will seek to increase the number of covered lives during the first year. We have contracted with the Centers for Medicare and Medicaid Services regarding certain government covered lives.  Further, we plan to introduce a co-pay assistance program and other patient affordability programs to appropriately support patient access to XHANCE.

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Infrastructure.  We continue to develop our internal capabilities and grew from 21 employees as of January 1, 2017 to 82 employees as of March 1, 2018 to support a commercial stage company.  We have implemented an enterprise resource planning system to expand our operational and commercial finance capabilities. We have implemented a robust healthcare compliance program to guide our staff’s and our partners' compliance with rules and regulations regarding pharmaceutical sales. In managing our growth, we have remained focused on fostering our One Mission culture.

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▪	personnel expenses, including salaries, benefits and stock-based compensation expense;

▪	costs of funding research performed by third parties, including pursuant to agreements with contract research organizations, or CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;

▪	expenses incurred under agreements with contract manufacturing organizations, or CMOs, including manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical study and clinical trial materials;

▪	consultant fees and expenses associated with outsourced professional scientific development services;

▪	expenses for regulatory activities, including filing fees paid to regulatory agencies and costs incurred to compile and respond to filings with the FDA;

▪	costs incurred to maintain, expand and protect our patent portfolio as it relates to product candidates in development; and

▪	allocated expenses for facility costs, including rent, utilities, depreciation and maintenance.

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Expected Term.  Due to the lack of a public market for the trading of our common stock and the lack of sufficient company-specific historical data, the expected term of employee options is determined using the "simplified" method, as prescribed in SEC's Staff Accounting Bulletin, or SAB, No. 107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option. The expected term of nonemployee options is equal to the contractual term.

•	Expected Volatility.  The expected volatility is based on historical volatilities of similar entities within our industry which were commensurate with the expected term assumption as described in SAB No. 107.

•	Risk-Free Interest Rate.  The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term.

•	Expected Dividends.  The expected dividend yield is 0% because we have not historically paid, and do not expect for the foreseeable future to pay, a dividend on our common stock.

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▪	a $1.2 million increase related to the preparation of contract manufacturing capabilities prior to the receipt of FDA approval of XHANCE in September of 2017 in anticipation of the expected commercial launch of XHANCE in the U.S. for the treatment of nasal polyps;

▪	a $1.3 million increase in personnel and bonus expenses, including non-cash stock-based compensation, due to increases in headcount, as well as increases in bonus expense as a result of the achievement of Company performance targets; and

▪	a $1.1 million increase in medical affairs spending in connection with the conduct, reporting and planning for current and future research programs and to prepare for our planned clinical trials for a follow-on indication for XHANCE for the treatment of chronic sinusitis.

▪	a $1.3 million decrease in regulatory expenses as a result of the substantial completion in 2016 of our NDA submission activities for XHANCE for the treatment of nasal polyps; and

▪	a $0.7 million decrease in expenses as a result of the completion of an anthropometric study in preparation for the FDA mandated pediatric studies as well as the completion of other early research projects.

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▪	a $9.7 million increase in sales and marketing expenses related to our preparation for the expected commercial launch of XHANCE in the U.S. for the treatment of nasal polyps;

▪	a $9.1 million increase in personnel and bonus expenses, including non-cash stock-based compensation, due to increases in headcount, as well as increases in bonus expense as a result of the achievement of Company performance targets;

▪	a $4.4 million increase in professional fees and consultant expenses related to the completion of our IPO, the support of our expanding infrastructure to prepare for the expected commercial launch of XHANCE and as a result of operating as a public company; and

▪	$1.7 million increase in facilities and administrative expenses to support expanding business operations.

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•	a $2.2 million increase in personnel and bonus expense;

•	a $0.8 million increase in regulatory and intellectual property maintenance costs in connection with the submission of our NDA for XHANCE for the treatment of nasal polyps; and

•	a $0.1 million increase in rent and other operating expenses in connection our new corporate office lease.

•	a $1.5 million increase in personnel and bonus expense;

•	a $0.6 million increase in professional service expenses as a result of our preparations to become a public company and for the expected commercial launch of XHANCE for the treatment of nasal polyps; and

•	a $0.1 million increase in rent and other operating expenses in connection with our new corporate office lease.

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▪	deploy a contract specialty sales force, which initially consists of approximately 80 territory managers, to market XHANCE for the treatment of nasal polyps and build commercial infrastructure to support sales and marketing for XHANCE;

▪	initiate advertising and other promotional activities to support the commercialization of XHANCE;

▪	continue clinical development activities for XHANCE, including FDA-mandated pediatric studies and clinical trials for a follow-on indication for the treatment of chronic sinusitis;

▪	hire additional staff and add operational, financial and information systems to execute our business plan;

▪	maintain, expand and protect our patent portfolio;

▪	contract to manufacture XHANCE and our other product candidates;

▪	service our debt obligations under the Notes issued in December 2017;

▪	continue research and development activities for our other product candidates; and

▪	operate as a public company.

▪	the success of our commercialization of XHANCE for the treatment of nasal polyps including, among other things, patient and physician acceptance of XHANCE and our ability to obtain adequate coverage and reimbursement for XHANCE;

▪	the cost and timing of commercialization activities for XHANCE, including product manufacturing, marketing, sales and distribution;

▪	revenue received from commercial sales of XHANCE;

▪	our clinical development plans for XHANCE, including FDA-mandated pediatric studies and clinical trials for the follow-on indication for the treatment of chronic sinusitis;

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▪	the outcome, timing and cost of the regulatory approval process of XHANCE for chronic sinusitis by the FDA, including the potential for the FDA to require that we perform more studies and clinical trials than those that we currently expect;

▪	the costs involved in preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and;

▪	the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us;

▪	potential future licensing revenue from the AVP-825 License Agreement;

▪	fluctuations in the three-month LIBOR-based floating interest rate of our Notes;

▪	the initiation, progress, timing, costs and results of clinical trials for our other product candidates; and

▪	the extent to which we in-license or acquire other products, product candidates or technologies.

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•	Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.

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•	Level 2 — Valuations based on observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

•	Level 3 — Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.

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The expected term of employee options is determined using the "simplified" method, as prescribed in SEC's Staff Accounting Bulletin (SAB) No. 107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company's lack of sufficient historical data. The expected term of nonemployee options is equal to the contractual term.

•	The expected volatility is based on historical volatilities of similar entities within the Company's industry which were commensurate with the expected term assumption as described in SAB No. 107.

•	The risk-free interest rate is based on the interest rate payable on US Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term.

•	The expected dividend yield is 0% because the Company has not historically paid, and does not expect for the foreseeable future to pay, a dividend on its common stock.

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II	Notes, Purchase Prices and Delayed Draw Note Commitments

12.02	Certain Addresses for Notices

A-1	Form of Initial Note

A-2	Form of Delayed Draw Note

B	Form of Joinder Agreement

C	Form of Assignment and Assumption

D	Form of Compliance Certificate

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ISSUERS:	OPTINOSE AS,

GUARANTORS:	OPTINOSE, INC.,

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COLLATERAL AGENT:	ATHYRIUM OPPORTUNITIES III ACQUISITION LP,

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