Purpose: MM-II is a suspension of large multilamellar liposomes composed of two phospholipids, DMPC and DPPC, for intra-articular administration, under development for treatment of osteoarthritic pain. Due to their unique characteristics, MM-II liposomes are retained on the cartilage surface, providing long-term lubrication and leading to a reduction in wear of the cartilage. The purpose of these preclinical studies was to evaluate the toxicity of MM-II, when administered via intra-articular (IA) injection into the stifle joint of rabbits and dogs. Methods: In two GLP compliant studies, Rabbits or Beagle dogs were administered IA injection of placebo, saline or low (22 mg/kg and 20 mg/kg for rabbits and dogs respectively), mid (44 mg/kg and 39 mg/kg for rabbits and dogs respectively) and high (66 mg/kg and 59 mg/kg for rabbits and dogs respectively) doses of MM-II. Animals were assessed post dose for 4 days, 14 weeks, or 18 weeks. Assessment of toxicity was based on mortality, clinical observations, body weight change, food consumption, ophthalmic observations, electrocardiographic (ECG) measurements (dogs only), and clinical and anatomic pathology. As part of this study, blood samples were collected for toxicokinetic (TK) evaluation and synovial fluid samples were collected for clinical pathology evaluations. Results: Rabbits: No MM-II-related mortality, MM-II-related clinical observations; effects on qualitative food consumption; findings during ophthalmic examinations; effects in hematology, coagulation, clinical chemistry, or urinalysis test results; or organ weight effects or macroscopic findings were noted. MM-II related findings were limited to a non-adverse moderate increase in body weights for the females at all dose levels and reversible, non-adverse microscopic findings of synovial hyperplasia and mixed cell inflammation in the injected stifle of all groups administered MM-II. After MM-II administration, DMPC exposure, as assessed by mean Cmax and AUC0-72, was higher than its endogenous baseline level and the placebo and saline control groups. After reaching Cmax, DMPC concentrations declined largely, through 144 or 552 hours post dosing. DPPC exposure was relatively similar to its endogenous baseline level and to their levels in the placebo and saline control groups. Dogs: No MM-II-related mortality, MM-II-related clinical observations; effects on qualitative food consumption; findings during ophthalmic examinations; effects in hematology, coagulation, clinical chemistry, or urinalysis test results; or organ weight effects or macroscopic findings were noted. MM-II related findings were limited to reversible, transient, non-adverse, minimally to mildly higher synovial fluid white and red blood cell counts and microscopic findings of synovial hyperplasia and mixed cell inflammation in the injected stifle of all groups administered MM-II. After MM-II administration, DMPC exposure as assessed by mean Cmax and AUC0-72 was higher than its endogenous baseline levels and the placebo and saline control groups. After reaching Cmax, mean DMPC concentrations declined largely through 312 or 552 hours post dosing. DPPC exposure was relatively similar to its endogenous baseline level and to their levels in the placebo and saline control groups. Conclusions: In both studies, MM-II related findings were considered non-adverse at all dose levels. The NOAEL was determined as 59 mg/kg in the dogs study and 66 mg/kg in the rabbit study. Toxicokinetic findings in both studies indicated that DMPC exposure appears to be impacted by MM-II administration, but DPPC is not. The highest doses employed in these studies provide a maximal local safety margin of 11.9-fold for dogs and 22.9-fold for MM-II in rabbits of the highest dose to be administered in MM-II phase 2 clinical trial. To conclude, MM-II was found safe with no adverse events and with a NOAEL of highest dose employed in the study.