On December 12, 2016, Acucela Inc. (Acucela), a wholly-owned
subsidiary of Kubota Pharmaceutical Holdings Co., Ltd. (the KPH),
entered into an RD Collaboration Agreement (the Collaboration
Agreement) with EyeMedics, LLC (EyeMedics). to the terms of the
Collaboration Agreement, Acucela and EyeMedics will jointly
conduct through human proof of concept the pre-clinical and
clinical development of certain lipoxin biomimetic small
molecules covered by the license from the University of Southern
California for the treatment, prevention and diagnosis of
ophthalmic diseases (the Licensed Products), with an initial
focus on diabetic macular edema.

Concurrently with the execution of the Collaboration Agreement,
Acucela and EyeMedics entered into an Asset Purchase Agreement
(the Purchase Agreement), to which EyeMedics granted to Acucela
an exclusive option to purchase (the Option) EyeMedics assets
related to the development program contemplated by the
Collaboration Agreement (the Program Assets). Acucelas option to
acquire the Program Assets may be exercised at any time and
expires 120 days after a meeting between EyeMedics and the U.S.
Food and Drug Administration (the FDA) to discuss the results of
a Phase 2 human proof of concept clinical trial of the Licensed
Products. If EyeMedics materially breaches its obligations to the
Collaboration Agreement and fails to cure such breaches after
notice, Acucela may exercise certain step-in rights to assume
responsibility for such EyeMedics obligations. If Acucela
exercises such step-in rights, the option period will expire on
the earlier of 120 days after a meeting between Acucela and the
FDA to discuss the results of a Phase 2 human proof of concept
clinical trial of the Licensed Products and June 30, 2021. If
Acucela exercises its option to acquire the Program Assets, in
addition to the purchase price set forth in the Option, it will
assume certain liabilities related to the Program Assets and will
be obligated to make certain milestone and royalty payments to
EyeMedics to the terms of the Purchase Agreement.

Acucela and EyeMedics have set forth the specific research and
development activities to be conducted to the Collaboration
Agreement in a written initial joint development plan and will
establish a joint development committee composed of two
representatives of each of Acucela and EyeMedics to oversee the
collaboration activities.

During the period in which Acucela may exercise the Option,
EyeMedics shall have overall responsibility to manage all
activities under the joint development plan, including all
pre-clinical activities and regulatory activities and filings.
Acucela shall have responsibility for all clinical trials
described in the joint development plan and funding the EyeMedics
activities set forth in the joint development plan.

The Collaboration Agreement will terminate upon the earliest of
expiration of the period in which Acucela may exercise the
Option, the termination of the Purchase Agreement and the closing
of the Acucelas acquisition of the Program Assets to the Purchase
Agreement. Each party may terminate the Collaboration Agreement
in the event of the other partys material breach that is not
remedied after written notice and an opportunity to cure. Acucela
may also terminate the Collaboration Agreement at-will upon 60
days prior written notice to EyeMedics.

A press release issued by Acucela on December 14, 2016 (Japan
Standard Time) regarding the execution of the Collaboration
Agreement and Purchase Agreement is attached hereto as Exhibit
99.1 and is incorporated herein by reference.