OCULAR THERAPEUTIX, INC [OCUL] Filings

10-Q 1 ocul-20240930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-36554

Ocular Therapeutix, Inc.

(Exact name of registrant as specified in its charter)


Delaware	20-5560161
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

15 Crosby Drive
Bedford, MA	01730
(Address of principal executive offices)	(Zip Code)

(781) 357-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	OCUL	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 11, 2024, there were 157,217,427 shares of Common Stock, $0.0001 par value per share, outstanding.

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Ocular Therapeutix, Inc.

INDEX

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023	4

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023	6

	Notes to the Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	40

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 5.	Other Information	41

Item 6.	Exhibits	42

SIGNATURES		45

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “target,” “potential,” “goals,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

●

our ongoing clinical trials, including our two registrational Phase 3 clinical trials of AXPAXLI for the treatment of wet age-related macular degeneration, or wet AMD, which we refer to as the SOL-1 trial and the SOL-R trial, respectively, and our Phase 2 clinical trial of PAXTRAVA for the reduction of intraocular pressure, or IOP, in patients with primary open-angle glaucoma, or OAG, or ocular hypertension, or OHT;

●

our clinical trials which we have completed, subject to finalization of the clinical study reports, including our Phase 1 clinical trials of AXPAXLI for the treatment of wet AMD; our Phase 1 clinical trial of AXPAXLI for the treatment of non-proliferative diabetic retinopathy, or NPDR, which we refer to as the HELIOS trial; and our Phase 2 clinical trial of OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease;

●

any additional clinical trials we might determine in the future to conduct for our product candidates;

●

determining our next steps for AXPAXLI for the treatment of patients with NPDR, PAXTRAVA for the treatment of patients with OAG or OHT, OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease, and OTX-CSI for the chronic treatment of dry eye disease;

●

our commercialization efforts for our product DEXTENZA;

●

our plans to potentially develop, seek regulatory approval for and commercialize AXPAXLI, PAXTRAVA, OTX-DED, OTX-CSI, and any other product candidate that we might develop based on our proprietary bioresorbable hydrogel-based formulation technology ELUTYX;

●

our ability to manufacture DEXTENZA, AXPAXLI, and our other product candidates in compliance with Current Good Manufacturing Practices and in sufficient quantities for our clinical trials and commercial use;

●

the timing of and our ability to submit applications and obtain and maintain regulatory approvals for DEXTENZA and our product candidates;

●

our estimates regarding future revenue; expenses; the sufficiency of our cash resources; our ability to fund our operating expenses, debt service obligations and capital expenditure requirements; and our needs for additional financing;

●

our plans to raise additional capital, including through equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, royalty agreements and marketing and distribution arrangements;

●

the potential advantages of DEXTENZA and our product candidates;

●

the rate and degree of market acceptance and clinical utility of our products;

●

our ability to secure and maintain reimbursement for our products as well as the associated procedures to insert, implant or inject our products;

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●

our estimates regarding the market opportunity for DEXTENZA and our product candidates;

●

our license agreement and collaboration with AffaMed Therapeutics Limited under which we are collaborating on the development and commercialization of DEXTENZA and our product candidate PAXTRAVA in mainland China, Taiwan, Hong Kong, Macau, South Korea, and the countries of the Association of Southeast Asian Nations;

●

our capabilities and strategy, and the costs and timing of manufacturing, sales, marketing, distribution and other commercialization efforts with respect to DEXTENZA and any additional products for which we may obtain marketing approval in the future;

●

our intellectual property position;

●

the impact of government laws and regulations; and

●

our competitive position.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023, that was filed with the Securities and Exchange Commission, or the SEC, on March 11, 2024, in each case, particularly in the section captioned “Risk Factors”, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, licensing agreements or investments we may make.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q and our other periodic reports completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q. We do not assume, and we expressly disclaim, any obligation or undertaking to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. All of the market data used in this Quarterly Report on Form 10-Q involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. While we believe that the information from these industry publications, surveys and studies is reliable, we have not independently verified such data. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of important factors, including those described in the section titled “Risk Factors.”

This Quarterly Report on Form 10-Q contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q and the documents incorporated by reference herein may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. AXPAXLI is a trade name which we use to refer to our OTX-TKI product candidate, and PAXTRAVA is a trade name which we use to refer to our OTX-TIC product candidate. The U.S. Food and Drug Administration, or FDA, has not approved either AXPAXLI or PAXTRAVA as product names.

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PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements.

Ocular Therapeutix, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)


	September 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	427,220	$	195,807
Accounts receivable, net		30,235		26,179
Inventory		2,405		2,305
Restricted cash		—		150
Prepaid expenses and other current assets		13,151		7,794
Total current assets		473,011		232,235
Property and equipment, net		10,050		11,739
Restricted cash		1,614		1,614
Operating lease assets		5,694		6,472
Total assets	$	490,369	$	252,060
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	4,001	$	4,389
Accrued expenses and other current liabilities		30,451		28,666
Deferred revenue		190		255
Operating lease liabilities		1,717		1,586
Total current liabilities		36,359		34,896
Other liabilities:
Operating lease liabilities, net of current portion		5,592		6,878
Derivative liabilities		14,465		29,987
Deferred revenue, net of current portion		14,000		14,135
Notes payable, net		67,815		65,787
Other non-current liabilities		117		108
Convertible Notes, net		—		9,138
Total liabilities		138,348		160,929
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized and no shares issued or outstanding at September 30, 2024 and December 31, 2023, respectively		—		—
Common stock, $0.0001 par value; 400,000,000 and 200,000,000 shares authorized and 156,654,938 and 114,963,193 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		16		12
Additional paid-in capital		1,194,701		788,697
Accumulated deficit		(842,696)		(697,578)
Total stockholders’ equity		352,021		91,131
Total liabilities and stockholders’ equity	$	490,369	$	252,060

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Ocular Therapeutix, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenue:
Product revenue, net	$	15,347	$	14,950	$	46,441	$	43,193
Collaboration revenue		78		131		200		449
Total revenue, net		15,425		15,081		46,641		43,642
Costs and operating expenses:
Cost of product revenue		1,561		1,377		4,396		3,895
Research and development		37,054		15,019		86,646		44,860
Selling and marketing		10,573		9,315		30,750		31,304
General and administrative		12,235		8,584		46,054		25,915
Total costs and operating expenses		61,423		34,295		167,846		105,974
Loss from operations		(45,998)		(19,214)		(121,205)		(62,332)
Other income (expense):
Interest income		5,653		1,212		15,611		2,524
Interest expense		(3,224)		(3,426)		(10,471)		(7,187)
Change in fair value of derivative liabilities		7,076		6,722		(1,103)		1,290
Gains and losses on extinguishment of debt, net		—		14,190		(27,950)		14,190
Other expense		—		—		—		(1)
Total other income (expense), net		9,505		18,698		(23,913)		10,816
Net loss	$	(36,493)	$	(516)	$	(145,118)	$	(51,516)
Net loss per share, basic	$	(0.22)	$	(0.01)	$	(0.94)	$	(0.66)
Weighted average common shares outstanding, basic		166,992,735		79,373,272		154,990,112		78,276,341
Net loss per share, diluted	$	(0.22)	$	(0.25)	$	(0.94)	$	(0.77)
Weighted average common shares outstanding, diluted		166,992,735		85,142,504		154,990,112		84,045,573

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Ocular Therapeutix, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(145,118)	$	(51,516)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation expense		25,912		13,497
Non-cash interest expense		3,158		4,553
Change in fair value of derivative liabilities		1,103		(1,290)
Depreciation and amortization expense		2,835		2,025
Gains and losses on extinguishment of debt, net		27,950		(14,190)
Gain on disposal of property and equipment		—		(1)
Changes in operating assets and liabilities:
Accounts receivable		(4,056)		(2,264)
Prepaid expenses and other current assets		(5,357)		(834)
Inventory		(100)		(283)
Accounts payable		(430)		(73)
Operating lease assets		778		1,174
Accrued expenses		(568)		2,019
Deferred revenue		(200)		551
Operating lease liabilities		(1,155)		(1,148)
Net cash used in operating activities		(95,248)		(47,780)
Cash flows from investing activities:
Purchases of property and equipment		(1,086)		(5,628)
Net cash used in investing activities		(1,086)		(5,628)
Cash flows from financing activities:
Proceeds from issuance of short-term bridge loan		—		2,000
Proceeds from issuance of Barings notes payable		—		82,474
Proceeds from exercise of stock options		10,752		543
Proceeds from issuance of common stock pursuant to employee stock purchase plan		492		418
Payments of debt refinancing costs		—		(5,184)
Proceeds from issuance of common stock upon public offering, net of issuance costs		—		9,532
Repayment of MidCap notes payable		—		(26,125)
Repayment from issuance of short-term bridge loan		—		(2,000)
Proceeds from issuance of common stock and pre-funded warrants upon private placement, net of issuance costs		316,353		—
Net cash provided by financing activities		327,597		61,658
Net increase in cash, cash equivalents and restricted cash		231,263		8,250
Cash, cash equivalents and restricted cash at beginning of period		197,571		104,064
Cash, cash equivalents and restricted cash at end of period	$	428,834	$	112,314
Supplemental disclosure of cash flow information:
Cash paid for interest	$	18,198	$	2,865
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment included in accounts payable and accrued expenses	$	76	$	267

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Ocular Therapeutix, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)


				Additional				Total
	Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Par Value		Capital		Deficit		Equity
Balances at December 31, 2023	114,963,193	$	12	$	788,697	$	(697,578)	$	91,131
Issuance of common stock upon exercise of stock options	1,025,384		—		4,870		—		4,870
Issuance of common stock upon vesting of restricted stock units	532,717		—		—		—		—
Issuance of common stock and pre-funded warrants upon private placement, net of issuance costs	32,413,560		3		316,350		—		316,353
Issuance of common stock in connection with conversion of Convertible Notes	5,769,232		—		52,499		—		52,499
Stock-based compensation expense	—		—		7,978		—		7,978
Net loss	—		—		—		(64,848)		(64,848)
Balances at March 31, 2024	154,704,086	$	15	$	1,170,394	$	(762,426)	$	407,983
Issuance of common stock upon exercise of stock options	245,554		1		1,703		—		1,704
Issuance of common stock in connection with employee stock purchase plan	120,806		—		492		—		492
Issuance of common stock upon vesting of restricted stock units	553,917		—		—		—		—
Stock-based compensation expense	—		—		11,293		—		11,293
Net loss	—		—		—		(43,777)		(43,777)
Balances at June 30, 2024	155,624,363	$	16	$	1,183,882	$	(806,203)	$	377,695
Issuance of common stock upon exercise of stock options	961,030		—		4,178		—		4,178
Issuance of common stock upon vesting of restricted stock units	69,545		—		—		—		—
Stock-based compensation expense	—		—		6,641		—		6,641
Net loss	—		—		—		(36,493)		(36,493)
Balances at September 30, 2024	156,654,938	$	16	$	1,194,701	$	(842,696)	$	352,021

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Ocular Therapeutix, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)


				Additional				Total
	Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Par Value		Capital		Deficit		Equity
Balances at December 31, 2022	77,201,819	$	8	$	652,213	$	(616,842)	$	35,379
Issuance of common stock upon exercise of stock options	26,443		—		78		—		78
Issuance of common stock upon vesting of restricted stock units	288,376		—		—		—		—
Stock-based compensation expense	—		—		4,572		—		4,572
Net loss	—		—		—		(30,318)		(30,318)
Balances at March 31, 2023	77,516,638	$	8	$	656,863	$	(647,160)	$	9,711
Issuance of common stock upon exercise of stock options	97,435		—		403		—		403
Issuance of common stock in connection with employee stock purchase plan	176,406		—		418		—		418
Issuance of common stock upon vesting of restricted stock units	73,117		—		—		—		—
Issuance of common stock upon public offering, net of issuance costs	1,370,208		—		8,824		—		8,824
Stock-based compensation expense	—		—		4,413		—		4,413
Net loss	—		—		—		(20,682)		(20,682)
Balances at June 30, 2023	79,233,804	$	8	$	670,921	$	(667,842)	$	3,087
Issuance of common stock upon exercise of stock options	16,216		—		62		—		62
Issuance of common stock upon vesting of restricted stock units	17,376				—		—		—
Issuance of common stock upon public offering, net of issuance costs	144,718				708		—		708
Stock-based compensation expense	—		—		4,512		—		4,512
Net loss	—		—		—		(516)		(516)
Balances at September 30, 2023	79,412,114	$	8	$	676,203	$	(668,358)	$	7,853

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Ocular Therapeutix, Inc.

Notes to the Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share data)

(Unaudited)

1. Nature of the Business

Ocular Therapeutix, Inc. (the “Company”) was incorporated on September 12, 2006 under the laws of the State of Delaware. The Company is a biopharmaceutical company committed to improving vision in the real world through the development and commercialization of innovative therapies for retinal diseases and other eye conditions. AXPAXLI (axitinib intravitreal implant), the Company’s product candidate for retinal disease, is based on its ELUTYX proprietary bioresorbable hydrogel-based formulation technology. AXPAXLI is currently in Phase 3 clinical trials for wet age-related macular degeneration (“wet AMD”).

The Company also leverages the ELUTYX technology in its commercial product DEXTENZA (dexamethasone insert) 0.4mg, a corticosteroid approved by the U.S. Food and Drug Administration for the treatment of ocular inflammation and pain following ophthalmic surgery and ocular itching associated with allergic conjunctivitis, and in its product candidate PAXTRAVA (travoprost intracameral implant or OTX-TIC), which is currently in a Phase 2 clinical trial for the treatment of open-angle glaucoma or ocular hypertension.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, dependence on specific programs, compliance with government regulations, regulatory approval and compliance, reimbursement, uncertainty of market acceptance of products and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. Approved products will require significant sales, marketing and distribution support. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval and adequate reimbursement or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapidly changing technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees and consultants. The Company may not be able to generate significant revenue from sales of any product for several years, if at all. Accordingly, the Company will need to obtain additional capital to finance its operations.

The Company has incurred losses and negative cash flows from operations since its inception, and the Company expects to continue to generate operating losses and negative cash flows from operations in the foreseeable future. As of September 30, 2024, the Company had an accumulated deficit of $842,696. Based on its current operating plan which includes estimates of anticipated cash inflows from product sales and cash outflows from operating expenses and capital expenditures, the Company believes that its existing cash and cash equivalents of $427,220 as of September 30, 2024 will enable it to fund its planned operating expenses, debt service obligations and capital expenditures at least through the next 12 months from the issuance date of these unaudited condensed consolidated financial statements while the Company observes a minimum liquidity covenant of $20,000 in its credit facility (Note 7).

The future viability of the Company is dependent on the Company’s ability to generate cash flows from the sales of the Company’s product candidates, such as AXPAXLI, if and as approved, and the sales of DEXTENZA, and to raise additional capital to finance its operations. The Company will need to finance its operations through public or private securities offerings, debt financings, collaborations, strategic alliances, licensing agreements, royalty agreements, or marketing and distribution agreements. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. If the Company is unable to obtain funding on a timely basis, in sufficient amounts, or at all, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs for product candidates, product portfolio expansion or commercialization efforts, any of which could adversely affect its business prospects, or the Company may be unable to continue operations.

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2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements are consistent with those described in Note 2 - Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 11, 2024. The following information updates, and should be read in conjunction with, the significant accounting policies described in Note 2 - Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024.

Warrants

The Company accounts for issued warrants, including pre-funded warrants, as either liability or equity. Warrants are considered liabilities if they are mandatorily redeemable and they require settlement in cash or other assets, or a variable number of shares. Contracts that may require settlement for cash are liabilities, regardless of the probability of the occurrence of the triggering event. If warrants do not otherwise require liability classification, the Company assesses whether the warrants are indexed to its common stock. Liability-classified warrants are measured at fair value on the issuance date and at the end of each reporting period. Any change in the fair value of the warrants after the issuance date is recorded in the consolidated statements of operations as a gain or loss. Equity-classified warrants are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of these unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, the measurement and recognition of reserves for variable consideration related to product sales, revenue recognition related to a collaboration agreement that contains multiple promises, the fair value of derivatives, stock-based compensation, and realizability of net deferred tax assets. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company’s estimates.

Unaudited Interim Financial Information

The balance sheet at December 31, 2023 was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 have been prepared by the Company, pursuant to the rules and regulations of the SEC for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2024, the results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023 have been made. The results of operations for the three and nine months ended September 30, 2024 and 2023 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024.

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Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 Segment Reporting - Improvements to Reportable Segment Disclosures. The amendments require disclosure of incremental segment information on an annual and interim basis. The amendments also require companies with a single reportable segment to provide all disclosures required by this amendment and all existing segment disclosures in Accounting Standards Codification Topic 280 Segment Reporting. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company does not expect the adoption of the amendments to have a significant impact on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09 Income Taxes - Improvements to Income Tax Disclosures. The amendments require (i) enhanced disclosures in connection with an entity's effective tax rate reconciliation and (ii) income taxes paid disaggregated by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of the amendments to have a significant impact on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03 Disaggregation of Income Statement Expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses and is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company does not expect the adoption of the amendments to have a significant impact on its consolidated financial statements.

3. Licensing Agreements and Deferred Revenue

Incept License Agreement (in-licensing)

On September 13, 2018, the Company entered into a second amended and restated license agreement with Incept, LLC (“Incept”) to use and develop certain intellectual property (the “Incept License Agreement”). Under the Incept License Agreement, as amended and restated, the Company was granted a worldwide, perpetual, exclusive license to use specific Incept technology to develop and commercialize products that are delivered to or around the human eye for diagnostic, therapeutic or prophylactic purposes relating to ophthalmic diseases or conditions. The Company is obligated to pay low single-digit royalties on net sales of commercial products developed using the licensed technology, commencing with the date of the first commercial sale of such products and until the expiration of the last to expire of the patents covered by the license.

The terms and conditions of the Incept License Agreement are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024.

Royalties paid under this agreement related to product sales (the “Incept Royalties”) were $491 and $1,373 for the three and nine months ended September 30, 2024, respectively, and $451 and $1,264 for the three and nine months ended September 30, 2023, respectively. The Incept Royalties have been charged to cost of product revenue.

AffaMed License Agreement (out-licensing)

On October 29, 2020, the Company entered into a license agreement (“AffaMed License Agreement”) with AffaMed Therapeutic Limited (“AffaMed”) for the development and commercialization of the Company’s DEXTENZA product regarding ocular inflammation and pain following cataract surgery and allergic conjunctivitis and for the Company’s PAXTRAVA product candidate (collectively the “AffaMed Licensed Products”) regarding open-angle glaucoma or ocular hypertension, in each case in mainland China, Taiwan, Hong Kong, Macau, South Korea, and the countries of the Association of Southeast Asian Nations. The Company retains development and commercialization rights for the AffaMed Licensed Products in the rest of the world.

The terms and conditions of the AffaMed License Agreement are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024.

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The Company recognized collaboration revenue related to its performance obligation regarding the conduct of a Phase 2 clinical trial of PAXTRAVA (the “Phase 2 Clinical Trial of PAXTRAVA performance obligation”) of $78 and $200 for the three and nine months ended September 30, 2024, respectively, and $131 and $449 for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, the aggregate amount of the transaction price allocated to the partially unsatisfied Phase 2 Clinical Trial of PAXTRAVA performance obligation was $190. This amount is expected to be recognized as this performance obligation is satisfied through June 2025.

Deferred revenue activity for the nine months ended September 30, 2024 was as follows:



	Deferred Revenue
Deferred revenue at December 31, 2023	$	14,390
Amounts recognized into revenue		(200)
Deferred revenue at September 30, 2024	$	14,190

4. Cash Equivalents and Restricted Cash

The Company’s unaudited condensed consolidated statements of cash flows include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on such statements. A reconciliation of the cash, cash equivalents, and restricted cash reported within the balance sheets that sum to the total of the same amounts shown in the unaudited condensed consolidated statement of cash flows is as follows:


	September 30,		September 30,
	2024		2023
Cash and cash equivalents	$	427,220	$	110,550
Restricted cash (non-current)		1,614		1,764
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$	428,834	$	112,314

The Company held restricted cash as security deposits for its real estate leases.

5. Inventory

Inventory consisted of the following:


	September 30,		December 31,
	2024		2023
Raw materials	$	196	$	302
Work-in-process		1,400		1,012
Finished goods		809		991
	$	2,405	$	2,305

6. Expenses

Restructuring

On May 29, 2024, the Company’s board of directors approved a strategic reduction in force to eliminate 37 full-time employees of the Company, primarily in research and development and technical operations and representing approximately 13% of the Company’s workforce, as part of an initiative to prioritize Company resources on the clinical development of AXPAXLI for the treatment of wet AMD.

The Company substantially completed the reduction in force and recorded the related restructuring costs, primarily for paid leave for terminated employees, severance, and related costs, in the three months ended June 30, 2024. The accrued restructuring costs remaining at June 30, 2024 were paid in the three months ended September 30, 2024.

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A roll-forward of the costs accrued with regard to this restructuring is as follows:


	As of
Accrued restructuring costs at March 31, 2024		—
Restructuring costs incurred during the period		1,601
Restructuring costs paid during the period		(395)
Accrued restructuring costs at June 30, 2024		1,206
Restructuring costs paid during the period		(1,206)
Accrued restructuring costs at September 30, 2024		—

Restructuring costs incurred during the nine months ended September 30, 2024 are included in general and administrative expenses on the consolidated statements of operations and comprehensive loss.

Accrued Expenses

Accrued expenses and other current liabilities consisted of the following:


	September 30,		December 31,
	2024		2023
Accrued payroll and related expenses		11,106		8,156
Accrued research and development expenses	$	8,047	$	1,488
Accrued rebates and programs		5,658		5,117
Accrued professional fees		3,139		691
Accrued interest payable on Barings Credit Facility (Note 7)		710		803
Accrued other		1,791		1,525
Accrued interest payable on Convertible Notes (Note 7)		—		10,886
	$	30,451	$	28,666

7. Financial Liabilities

Barings Credit Agreement

On August 2, 2023 (the “Closing Date”), the Company entered into a credit and security agreement (the “Barings Credit Agreement”) with Barings Finance LLC (“Barings”), as administrative agent, and the lenders party thereto, providing for a secured term loan facility for the Company (the “Barings Credit Facility”) in the aggregate principal amount of $82,474 (the “Total Credit Facility Amount”). The Company borrowed the full amount of $82,474 at closing and received proceeds of $77,290, after the application of an original issue discount and fees. Indebtedness under the Barings Credit Facility matures on the earlier to occur of (i) the six-year anniversary of the Closing Date and (ii) the date that is 91 days prior to the maturity date for the Company’s Convertible Notes (as defined below). Indebtedness under the Barings Credit Facility incurs interest based on the Secured Overnight Financing Rate (“SOFR”), subject to a minimum 1.50% floor, plus 6.75%. The Company is obligated to make interest payments on its indebtedness under the Barings Credit Facility on a monthly basis, commencing on the Closing Date; to pay annual administration fees; and to pay, on the maturity date, any principal and accrued interest that remains outstanding as of such date. In addition, the Company is obligated to pay a fee in an amount equal to the Total Credit Facility Amount, which amount shall be reduced by the total amount of interest and principal prepayment fees paid under the Barings Credit Agreement (such fee, the “Barings Royalty Fee”). The Company is required to pay the Barings Royalty Fee in installments to Barings, for the benefit of the lenders, on a quarterly basis in an amount equal to three and one-half percent (3.5%) of the net sales of DEXTENZA occurring during such quarter, subject to the terms, conditions and limitations specified in the Barings Credit Agreement, until the Barings Royalty Fee is paid in full. The Barings Royalty Fee is due and payable upon a change of control of the Company. The Company may, at its option, prepay any or all of the Barings Royalty Fee at any time without penalty. In connection with the Barings Credit Agreement, the Company granted the lenders thereto a first-priority security interest in all assets of the Company, including its intellectual property, subject to certain agreed-upon exceptions. The Barings Credit Agreement includes a negative covenant requiring the Company to maintain a minimum liquidity amount of $20,000. The Barings Credit Agreement also includes customary affirmative and negative covenants.

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The Company determined that the embedded obligation to pay the Barings Royalty Fee (the “Barings Royalty Fee Obligation”) is required to be separated from the Barings Credit Facility and accounted for as a freestanding derivative instrument subject to derivative accounting. The allocation of proceeds to the Barings Royalty Fee Obligation resulted in a discount on the Barings Credit Facility. The Company is amortizing the discount to interest expense over the term of the Barings Credit Facility using the effective interest method. Accrued or paid Barings Royalty Fees are included in the change in fair value of derivative liabilities on the consolidated statements of operations and comprehensive loss (Note 9).

A summary of the Barings Credit Facility at September 30, 2024 and December 31, 2023 is as follows:


	September 30,		December 31,
	2024		2023
Barings Credit Facility	$	82,474		82,474
Less: unamortized discount		(14,659)		(16,687)
Total	$	67,815		65,787

As of September 30, 2024, the full principal for the Barings Credit Facility of $82,474 was due for repayment in 2029.

Convertible Notes

On March 1, 2019, the Company issued $37,500 of convertible notes, which accrued interest at an annual rate of 6% of their outstanding principal amount which was payable, along with the principal amount, at maturity unless earlier converted, repurchased or redeemed (as amended the “Convertible Notes”). The terms and conditions of the Convertible Notes are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024.

The Company has determined that the embedded conversion option was required to be separated from the Convertible Notes and has accounted for the embedded conversion option as a freestanding derivative instrument subject to derivative accounting (the “Conversion Option Derivative Liability”).

On March 28, 2024, the Company issued 5,769,232 shares of its common stock with a total fair value of $52,499 (Note 10) to the holder of the Convertible Notes in connection with the conversion of the principal amount of the Convertible Notes (the “Conversion”) and paid the holder $11,361 for accrued interest. The extinguishment of obligations under the Convertible Notes and the resulting derecognition of the principal of the Convertible Notes ($37,500), the unamortized discount ($27,950), and the Conversion Option Derivative Liability ($15,000), resulted in a net loss of $27,950, which was charged to losses on extinguishment of debt on the unaudited condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2024.

Concurrently with entering into the Barings Credit Agreement, on August 2, 2023, the Company and the holders of the Convertible Notes extended the maturity of the Convertible Notes, which would otherwise have matured on March 1, 2026, to a date 91 days following the maturity of the indebtedness under the Barings Credit Facility, unless earlier converted, repurchased or redeemed (the “Amendment”). The Company accounted for the Amendment as an extinguishment of debt in accordance with the guidance in Accounting Standards Codification Topic 470-50 Debt (“ASC 470-50”). Details of the accounting for the Amendment are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024. Application of ASC 470-50 resulted in a gain on extinguishment of debt of $14,907, which was charged to gains and losses on extinguishment of debt, net, on the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023.

MidCap Credit Agreement

The Company entered into a credit and security agreement in 2014 (as amended, the “MidCap Credit Agreement”) establishing a credit facility (the “MidCap Credit Facility”). The terms and conditions of the MidCap Credit Agreement and the MidCap Credit Facility are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024. In connection with entering into the Barings Credit Facility, in August 2023 the Company paid MidCap Financial Trust, as administrative agent, and its other lenders an aggregate of

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$26,157 in satisfaction of the Company’s obligations under the MidCap Credit Facility. In connection with its satisfaction of its obligations, the Company extinguished the MidCap Credit Facility, and all liens and security interests securing the indebtedness under the MidCap Credit Agreement were released. The extinguishment of the MidCap Credit Facility resulted in a loss of $717, which was charged to gains and losses on extinguishment of debt, net, on the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023.

In March 2023, the Company requested, and received, a protective advance of $2,000 under the MidCap Credit Agreement as a short-term bridge loan in response to the closure of Silicon Valley Bank by the California Department of Financial Protection and Innovation. This protective advance was deemed a credit extension. The Company repaid the full principal amount of $2,000 in March 2023.

8. Derivative Liability

Barings Credit Agreement

The Barings Credit Agreement (Note 7) contains the embedded Barings Royalty Fee Obligation that meets the criteria to be bifurcated and accounted for separately from the Barings Credit Facility (the “Royalty Fee Derivative Liability”). The Royalty Fee Derivative Liability was recorded at fair value upon the entering into the Barings Credit Facility and is subsequently remeasured to fair value at each reporting period. The Royalty Fee Derivative Liability was initially valued and is remeasured using a “with-and-without” method. The “with-and-without” methodology involves valuing the whole instrument on an as-is basis with the embedded Barings Royalty Fee Obligation and then valuing the instrument without the embedded Barings Royalty Fee Obligation. Royalty payments are estimated using a Monte Carlo simulation. Refer to Note 9 for details regarding the determination of fair value.

A roll-forward of the Royalty Fee Derivative Liability is as follows:


	As of
Balance at December 31, 2023	$	12,389
Change in fair value		2,076
Balance at September 30, 2024	$	14,465

Convertible Notes

The Convertible Notes (Note 7), which were extinguished in March 2024, contained the Conversion Option Derivative Liability, an embedded conversion option that meets the criteria to be bifurcated and accounted for separately from the Convertible Notes. The Conversion Option Derivative Liability was recorded at fair value upon the issuance of the Convertible Notes and was subsequently remeasured to fair value at each reporting period. The Conversion Option Derivative Liability was initially valued and was subsequently remeasured using a “with-and-without” method. The “with-and-without” methodology involves valuing the whole instrument on an as-is basis with the embedded conversion option and then valuing the instrument without the embedded conversion option. The difference between the entire instrument with the embedded conversion option compared to the instrument without the embedded conversion option is the fair value of the derivative, recorded as the Conversion Option Derivative Liability. Refer to Note 9 for details regarding the determination of fair value.

A roll-forward of the Conversion Option Derivative Liability is as follows:


	As of
Balance at December 31, 2023	$	17,598
Change in fair value		(2,598)
Balance at March 28, 2024		15,000
Extinguishment in connection with Conversion		(15,000)
Balance at September 30, 2024	$	—

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9. Risks and Fair Value

Concentration of Credit Risk and of Significant Suppliers and Customers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company has its cash and cash equivalents balances at two accredited financial institutions, in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company is dependent on a small number of third-party manufacturers to supply products for research and development activities in its preclinical and clinical programs and for sales of its products. The Company’s development programs as well as revenue from future product sales could be adversely affected by a significant interruption in the supply of any of the components of these products.

Three specialty distributor customers accounted for the following percentages of the Company’s total revenue:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Customer 1		41	%		47	%		45	%		51	%
Customer 2		26			24			23			23
Customer 3		9			12			11			11

Three specialty distributor customers accounted for the following percentages of the Company’s accounts receivable, net:


	As of
	September 30,			December 31,
	2024			2023
Customer 1		46	%		50	%
Customer 2		28			28
Customer 3		9			11

Change in Fair Value of Derivative Liabilities

Other income (expenses) from the change in the fair values of derivative liabilities as presented on the Company’s consolidated statements of operations and comprehensive loss includes the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Change in the fair value of the Conversion Option Derivative Liability	$	—	$	7,144	$	2,598	$	1,712
Change in the fair value of Royalty Fee Derivative Liability		7,613		(34)		(2,076)		(34)
Barings Royalty Fee		(537)		(388)		(1,625)		(388)
Total	$	7,076	$	6,722	$	(1,103)	$	1,290

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Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 and indicate the level of the fair value hierarchy utilized to determine such fair value:


	Fair Value Measurements as of
	September 30, 2024 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	414,734	$	—	$	—	$	414,734

Liability:
Derivative liabilities	$	—	$	—	$	14,465	$	14,465


	Fair Value Measurements as of
	December 31, 2023 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	187,951	$	—	$	—	$	187,951

Liability:
Derivative liabilities	$	—

OCULAR THERAPEUTIX, INC [OCUL] Filings
10-Q	[2024-11-14]
10-Q	[2024-08-07]
10-Q	[2024-05-07]
10-K	[2024-03-11]
10-Q	[2023-11-07]
10-Q	[2023-08-07]
10-Q	[2023-05-08]
10-K	[2023-03-06]
10-Q	[2022-11-07]
10-Q	[2022-08-08]
10-Q	[2022-05-09]
10-K	[2022-02-28]
10-Q	[2021-11-08]
10-Q	[2021-08-09]
10-Q	[2021-05-05]
10-K	[2021-03-11]
10-Q	[2020-11-05]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-03-12]
10-Q	[2019-11-12]
10-Q	[2019-08-07]
10-Q	[2019-05-10]
10-K	[2019-03-07]
10-Q	[2018-11-07]
10-Q	[2018-08-07]
10-Q	[2018-05-08]
10-K	[2018-03-08]
10-Q	[2017-11-07]
10-Q	[2017-08-08]
10-Q	[2017-05-05]
10-K	[2017-03-10]
10-Q	[2016-11-09]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-03-10]
10-Q	[2015-11-10]
10-Q	[2015-08-10]
S-1	[2015-05-20]
10-Q	[2015-05-15]
10-K	[2015-03-20]
10-Q	[2014-11-12]
10-Q	[2014-08-29]
S-1	[2014-06-20]