ocgn-20230930

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, 2023


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

Commission File Number: 001-36751

___________________________________________________________

OCUGEN, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________


Delaware			04-3522315
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

11 Great Valley Parkway

Malvern, Pennsylvania 19355

(Address of principal executive offices, including zip code)

(484) 328-4701

(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, par value $0.01 per share

OCGN

The Nasdaq Stock Market LLC

(The Nasdaq Capital 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 2, 2023, there were 256,502,434 outstanding shares of the registrant's common stock, $0.01 par value per share.

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OCUGEN, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023


		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and ni ne months ended September 30, 2023 and 2022	5
	Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended Septe mber 30, 2023 and 2022	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II—OTHER INFORMATION		31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities , Use of Proceed s , and Issuer Purchases of Equity Secu rities	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

Unless the context otherwise requires, references to the "Company," "we," "our," or "us" in this report refer to Ocugen, Inc. and its subsidiaries, and references to "OpCo" refer to Ocugen OpCo, Inc., the Company's wholly owned subsidiary.

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DISCLOSURE REGARDING 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 regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "would," or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties, and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated.

The forward-looking statements in this Quarterly Report on Form 10-Q and those contained in (i) our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission ("SEC") on February 28, 2023 (the "2022 Annual Report") and (ii) our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023 filed with the SEC on May 5, 2023 and August 21, 2023, respectively (together with this Quarterly Report on Form 10-Q, the "2023 Quarterly Reports"), include, among other things, statements about:

•our estimates regarding expenses, future revenues, capital requirements, as well as the timing, availability of, and the need for, additional financing to continue to advance our product candidates;

•our activities with respect to OCU400, including the results from our ongoing Phase 1/2 trial, alignment with the FDA on the Phase 3 study design, and subsequently initiate and complete a Phase 3 trial;

•our ability to obtain funding from government agencies in the United States and/or other countries to continue the development of our inhaled mucosal vaccine platform;

•the uncertainties associated with the clinical development and regulatory approval of our product candidates, OCU400, OCU410, OCU410ST, NeoCart, OCU200, and OCU500, including potential delays in the initiation, enrollment, and completion of current and future clinical trials, including our ability to resolve the FDA's clinical hold on our IND application for OCU200;

•our ability to realize any value from our product candidates and preclinical programs being developed and anticipated to be developed, in light of inherent risks and difficulties involved in successfully commercializing products and the risk that our products, if approved, may not achieve broad market acceptance;

•the uncertainties in obtaining successful trial results for our product candidates and unexpected costs that may result therefrom;

•our ability to comply with regulatory schemes and other regulatory developments applicable to our business in the United States and other countries;

•the performance of third-parties upon which we depend, including contract development and manufacturing organizations, suppliers, manufacturers, group purchasing organizations, distributors, and logistics providers;

•the pricing and reimbursement of our product candidates, if commercialized;

•our ability to obtain and maintain patent protection, or obtain licenses to intellectual property and defend our intellectual property rights against third-parties;

•our ability to maintain our relationships, profitability, and contracts with our key collaborators and commercial partners and our ability to establish additional collaborations and partnerships;

•our ability to recruit and retain key scientific, technical, commercial, and management personnel and to retain our executive officers;

•our ability to comply with stringent United States and applicable foreign government regulations with respect to the manufacturing of pharmaceutical products, including compliance with current Good Manufacturing Practice regulations, and other relevant regulatory authorities;

•the extent to which health epidemics and other outbreaks of communicable diseases, geopolitical turmoil, macroeconomic conditions, social unrest, political instability, terrorism, or acts of war could disrupt our business and operations, including impacts on our development programs, global supply chain, and collaborators and manufacturers; and

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•other matters discussed under the heading "Risk Factors" contained in the 2022 Annual Report, the 2023 Quarterly Reports, and in any other documents we have filed with the SEC.

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 our 2022 Annual Report and in the 2023 Quarterly Reports, particularly under the section titled "Risk Factors," that we believe 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, collaborations, investments, or other significant transactions we may make.

You should read this Quarterly Report on Form 10-Q and the documents we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we do not assume any obligation to update any forward-looking statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Solely for convenience, tradenames and trademarks referred to in this Quarterly Report on Form 10-Q appear without the ® or ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owners will not assert their rights, to these tradenames or trademarks, as applicable. All tradenames, trademarks, and service marks included or incorporated by reference in this Quarterly Report on Form 10-Q are the property of their respective owners. The name NeoCart has not been evaluated or cleared by the FDA.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

OCUGEN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)


	September 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	53,477	$	77,563
Marketable securities	—		13,371
Prepaid expenses and other current assets	3,081		7,558
Total current assets	56,558		98,492
Property and equipment, net	14,469		6,053
Other assets	3,660		4,087
Total assets	$	74,687	$	108,632
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	2,921	$	8,062
Accrued expenses and other current liabilities	6,399		9,900
Operating lease obligations	540		498
Current portion of long term debt	1,276		—
Total current liabilities	11,136		18,460
Non-current liabilities
Operating lease obligations, less current portion	3,164		3,587
Long term debt, net	1,495		2,289
Other non-current liabilities	497		244
Total non-current liabilities	5,156		6,120
Total liabilities	16,292		24,580
Commitments and contingencies (Note 13)
Stockholders' equity
Convertible preferred stock; $0.01 par value; 10,000,000 shares authorized at September 30, 2023 and December 31, 2022
Series A; zero shares issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Series B; 54,745 shares issued and outstanding at September 30, 2023 and December 31, 2022	1		1
Common stock; $0.01 par value; 295,000,000 shares authorized, 256,621,487 and 221,721,182 shares issued, and 256,499,987 and 221,599,682 shares outstanding at September 30, 2023 and December 31, 2022, respectively	2,566		2,217
Treasury stock, at cost, 121,500 shares at September 30, 2023 and December 31, 2022	(48)		(48)
Additional paid-in capital	322,452		294,874
Accumulated other comprehensive income	27		26
Accumulated deficit	(266,603)		(213,018)
Total stockholders' equity	58,395		84,052
Total liabilities and stockholders' equity	$	74,687	$	108,632

See accompanying notes to condensed consolidated financial statements.

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OCUGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Operating expenses
Research and development	$	6,342	$	15,622	$	30,069	$	32,544
General and administrative	9,082		7,497		26,839		28,174
Total operating expenses	15,424		23,119		56,908		60,718
Loss from operations	(15,424)		(23,119)		(56,908)		(60,718)
Other income (expense), net	1,262		1,197		3,323		1,306
Net loss	$	(14,162)	$	(21,922)	$	(53,585)	$	(59,412)
Other comprehensive income (loss)
Foreign currency translation adjustment	5		20		2		30
Unrealized gain (loss) on marketable securities	—		—		(1)		—
Comprehensive loss	$	(14,157)	$	(21,902)	$	(53,584)	$	(59,382)

Shares used in calculating net loss per common share — basic and diluted	256,492,558		216,591,011		240,222,667		212,755,746
Net loss per share of common stock — basic and diluted	$	(0.06)	$	(0.10)	$	(0.22)	$	(0.28)

See accompanying notes to condensed consolidated financial statements.

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OCUGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share amounts)

(Unaudited)


	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Common Stock			Treasury Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2022	—	$	—	54,745	$	1	221,721,182	$	2,217	$	(48)	$	294,874	$	26	$	(213,018)	$	84,052
Stock-based compensation expense	—	—		—	—		—	—		—		2,689		—		—		2,689
Issuance of common stock for stock option exercises and restricted stock unit vesting, net	—	—		—	—		348,555	3		—		(4)		—		—		(1)
Issuance of common stock for capital raises, net	—	—		—	—		4,478,956	45		—		5,514		—		—		5,559
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		(1)		—		(1)
Net loss	—	—		—	—		—	—		—		—		—		(16,498)		(16,498)
Balance at March 31, 2023	—	$	—	54,745	$	1	226,548,693	$	2,265	$	(48)	$	303,073	$	25	$	(229,516)	$	75,800
Stock-based compensation expense	—	—		—	—		—	—		—		2,632		—		—		2,632
Issuance of common stock for stock option exercises and restricted stock unit vesting, net	—	—		—	—		59,859	1		—		9		—		—		10
Issuance of common stock for capital raises, net	—	—		—	—		30,000,000	300		—		14,467		—		—		14,767
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		(3)		—		(3)
Net loss	—	—		—	—		—	—		—		—		—		(22,925)		(22,925)
Balance at June 30, 2023	—	$	—	54,745	$	1	256,608,552	$	2,566	$	(48)	$	320,181	$	22	$	(252,441)	$	70,281
Stock-based compensation expense	—	—		—	—		—	—		—		2,174		—		—		2,174
Issuance of common stock for stock option exercises and restricted stock unit vesting, net	—	—		—	—		12,935	—		—		97		—		—		97
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		5		—		5
Net loss	—	—		—	—		—	—		—		—		—		(14,162)		(14,162)
Balance at September 30, 2023	—	$	—	54,745	$	1	256,621,487	$	2,566	$	(48)	$	322,452	$	27	$	(266,603)	$	58,395

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OCUGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)

(in thousands, except share amounts)

(Unaudited)


	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Common Stock			Treasury Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2021	7	$	—	54,745	$	1	199,502,183	$	1,995	$	(48)	$	225,537	$	—	$	(131,667)	$	95,818
Stock-based compensation expense	—	—		—	—		—	—		—		3,299		—		—		3,299
Issuance of common stock for stock option exercises and restricted stock unit vesting, net	—	—		—	—		277,323	3		—		177		—		—		180
Issuance of common stock for capital raises, net	—	—		—	—		15,973,420	160		—		49,691		—		—		49,851
Net loss	—	—		—	—		—	—		—		—		—		(18,019)		(18,019)
Balance at March 31, 2022	7	$	—	54,745	$	1	215,752,926	$	2,158	$	(48)	$	278,704	$	—	$	(149,686)	$	131,129
Stock-based compensation expense	—	—		—	—		—	—		—		2,079		—		—		2,079
Issuance of common stock for stock option exercises and restricted stock unit vesting, net	—	—		—	—		515,221	5		—		356		—		—		361
Series A convertible preferred stock conversion	(7)	—		—	—		3,115	—		—		—		—		—		—
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		10		—		10
Net loss	—	—		—	—		—	—		—		—		—		(19,471)		(19,471)
Balance at June 30, 2022	—	$	—	54,745	$	1	216,271,262	$	2,163	$	(48)	$	281,139	$	10	$	(169,157)	$	114,108
Stock-based compensation expense	—	—		—	—		—	—		—		2,495		—		—		2,495
Issuance of common stock for stock option exercises and restricted stock unit vesting, net	—	—		—	—		538,675	5		—		597		—		—		602
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		20		—		20
Net loss	—	—		—	—		—	—		—		—		—		(21,922)		(21,922)
Balance at September 30, 2022	—	$	—	54,745	$	1	216,809,937	$	2,168	$	(48)	$	284,231	$	30	$	(191,079)	$	95,303

See accompanying notes to condensed consolidated financial statements.

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OCUGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Nine months ended September 30,
	2023		2022
Cash flows from operating activities
Net loss	$	(53,585)	$	(59,412)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	525		307
Amortization (accretion) on marketable securities	(182)		—
Non-cash interest expense	87		58
Non-cash lease expense	401		463
Stock-based compensation expense	7,495		7,873
Impairment of advance for COVAXIN supply	4,074		—
Loss on disposal of fixed assets related to COVAXIN	363		—
Other	379		(673)
Changes in assets and liabilities:
Prepaid expenses and other current assets	132		1,888
Accounts payable and accrued expenses	(10,059)		6,592
Lease obligations	(382)		(261)
Net cash used in operating activities	(50,752)		(43,165)
Cash flows from investing activities
Purchases of marketable securities	(3,947)		—
Proceeds from the maturities of marketable securities	17,500		—
Purchases of property and equipment	(7,754)		(2,433)
Repayment of note receivable	—		761
Net cash provided by (used in) investing activities	5,799		(1,672)
Cash flows from financing activities
Proceeds from issuance of common stock, net	20,788		51,141
Payment of equity issuance costs	(355)		(298)
Proceeds from issuance of debt	500		500
Payment of debt issuance costs	(68)		(43)
Net cash provided by financing activities	20,865		51,300
Effect of changes in exchange rate on cash and cash equivalents	2		30
Net (decrease) increase in cash and cash equivalents	(24,086)		6,493
Cash, cash equivalents, and restricted cash at beginning of period	77,563		95,109
Cash and cash equivalents at end of period	$	53,477	$	101,602
Supplemental disclosure of non-cash investing and financing transactions:
Equity issuance costs	$	—	$	2
Purchases of property and equipment	$	1,969	$	1,231
Right-of-use asset related to operating leases	$	—	$	2,916
Debt issuance costs	$	—	$	19

See accompanying notes to condensed consolidated financial statements.

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OCUGEN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Business

Ocugen, Inc., together with its wholly owned subsidiaries ("Ocugen" or the "Company"), is a biotechnology company focused on discovering, developing, and commercializing novel gene and cell therapies, biologics, and vaccines that improve health and offer hope for patients across the globe. The Company is headquartered in Malvern, Pennsylvania, and manages its business as one operating segment.

Modifier Gene Therapy Platform

The Company is developing a modifier gene therapy platform designed to fulfill unmet medical needs related to retinal diseases, including inherited retinal diseases ("IRDs"), such as retinitis pigmentosa ("RP"), Leber congenital amaurosis ("LCA"), and Stargardt disease, as well as dry age-related macular degeneration ("AMD") with a gene-agnostic therapy. The Company's modifier gene therapy platform is based on the use of nuclear hormone receptors ("NHRs"), which have the potential to restore homeostasis—the basic biological processes in the retina. Unlike single-gene replacement therapies, which only target one genetic mutation, the Company believes that its modifier gene therapy platform, through its use of NHRs, represents a novel approach that has the potential both to address multiple retinal diseases caused by mutations in multiple genes with a gene-agnostic therapy and to address complex diseases that are potentially caused by imbalances in multiple gene networks.

The Company believes that OCU400 has the potential to be broadly effective in restoring retinal integrity and function across a range of genetically diverse IRDs, including RP and LCA. OCU400 has received Orphan Drug Designation ("ODD") from the United States Food and Drug Administration ("FDA") and Orphan Medicinal Product Designation ("OMPD") from the European Commission ("EC") for the treatment of RP and LCA.

The Company is conducting a Phase 1/2 trial to assess the safety and efficacy of unilateral subretinal administration of OCU400 in patients with nuclear receptor subfamily 2 group E member 3 ("NR2E3") and rhodopsin ("RHO")-related RP and centrosomal protein 290 ("CEP290")-related LCA in the United States. The Company has completed dosing adult RP patients as well as completed dosing three LCA patients including a pediatric patient in the Phase 1/2 study. In April 2023, the Company announced positive preliminary data among adult RP patients treated in the first two cohorts of the Phase 1/2 trial. In Cohorts 1 and 2 of the trial, seven participants with severe vision impairment due to RP associated with the RHO and NR2E3 gene mutations received a unilateral subretinal injection of either a low dose or a medium dose of OCU400, respectively. The preliminary results showed a favorable safety profile and visual improvements after treatment with OCU400 as measured by multi-luminance mobility testing ("MLMT") and best corrected visual acuity assessment ("BCVA").

In September 2023, the Company announced a positive trial update for 12 subjects who had completed a minimum follow up of six months. The trial update was an extension of the positive preliminary data mentioned above. The positive trial update demonstrated that OCU400 continued to be generally safe and well-tolerated in subjects across different mutations and dose levels as measured by MLMT, BCVA, and Low-Luminance Visual Acuity ("LLVA"). 83%, 83%, and 75% of participants demonstrated stabilization or improvements in OCU400 treated eyes on BCVA, LLVA, and MLMT scores, respectively from baseline. 86% of participants with the RHO gene mutation experienced either stabilization of or increase in MLMT scores from baseline, including a subset of 29% that demonstrated a three Lux luminance level improvement. The treatment effect on RHO-patients supports gene-agnostic mechanism of action for OCU400. The Company also intends to initiate a Phase 3 trial for OCU400 for the treatment of RP in early 2024, subject to the outcome of the ongoing Phase 1/2 trial and discussions with the FDA on the proposed Phase 3 trial design and timeline. Subsequently, the Company is expecting to expand OCU400 Phase 3 study for LCA patients in the second half of 2024 based on Phase 1/2 study results in LCA patients and alignment with the FDA.

The Company is also developing OCU410 and OCU410ST, utilizing the nuclear receptor genes RAR-related orphan receptor A ("RORA"), for the treatment of dry AMD and Stargardt disease, respectively. OCU410 is a potential one-time, curative therapy with a single sub-retinal injection. OCU410ST has received ODD from the FDA for the treatment of ABCA4-associated retinopathies, including Stargardt disease. The Company submitted Investigational New Drug ("IND") applications to the FDA for both OCU410 and OCU410ST in the second quarter of 2023. The FDA cleared the Company's IND applications, and the Company intends to dose patients in the Phase 1/2 trials by the end of 2023.

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Regenerative Medicine Cell Therapy Platform

NeoCart is a Phase 3-ready, regenerative medicine cell therapy technology that combines breakthroughs in bioengineering and cell processing to enhance the autologous cartilage repair process. NeoCart is a three-dimensional tissue-engineered disc of new cartilage that is manufactured by growing chondrocytes, the cells responsible for maintaining cartilage health. The chondrocytes are derived from the patient on a unique scaffold. In this therapy, healthy cartilage tissue is grown and implanted in the patient. Cartilage defects often lead to osteoarthritis if left untreated. Current surgical and nonsurgical treatment options are limited in their efficacy and durability. NeoCart has the potential to accelerate healing, reduce pain, and provide regenerative native-like cartilage strength with durable benefits post transplantation. In the Phase 2 clinical trial, NeoCart was shown to be generally well-tolerated and demonstrated greater clinical efficacy than microfracture surgery at two years after treatment. In a Phase 3 trial, NeoCart did not meet the primary endpoint of a statistically significant improvement in pain and function in a dual threshold responder analysis one year after treatment as compared to microfracture. However, in the modified Intent to Treat (mITT) population (which excludes those patients who were randomized but not treated with NeoCart), 74.2% of the NeoCart patients exhibited clinically meaningful improvements in pain and function compared to 62.0% of microfracture patients at one year (p=0.071). In this mITT population, patients treated with NeoCart achieved a statistically significant improvement in pain and function (p=0.018) six months after treatment as compared to patients treated with microfracture. Both NeoCart and microfracture were generally well tolerated and exhibited preliminary strong safety profiles. Based on this clinical benefit, the FDA granted a regenerative medicine advanced therapy ("RMAT") designation to NeoCart for the repair of full-thickness lesions of knee cartilage injuries in adults. Additionally, the Company received concurrence from the FDA on the confirmatory Phase 3 trial design. The Company is renovating an existing facility into a current Good Manufacturing Practice ("GMP") facility in accordance with the FDA's regulations in support of NeoCart manufacturing for personalized Phase 3 trial material. The Company intends to initiate the Phase 3 trial in the second half of 2024.

Inhaled Mucosal Vaccine Platform

The Company is developing a next-generation, inhalation-based mucosal vaccine platform based on a novel ChAd vector, which includes OCU500, a COVID-19 vaccine; OCU510, a seasonal quadrivalent flu vaccine; and OCU520, a combination quadrivalent seasonal flu and COVID-19 vaccine. The Company's inhaled mucosal vaccine platform is driven by its conviction to serve a public health concern, which requires the endorsement and support of government funding in order to develop and ultimately commercialize its vaccine candidates. As these vaccine candidates are being developed to be administered via inhalation, the Company believes they have the potential to generate rapid local immune response in the upper airways and lungs, where viruses enter and infect the body. The Company believes this unique delivery method may help reduce or prevent infection and transmission as well as provide protection against new virus variants. In October 2023, OCU500 was selected by the National Institute of Allergy and Infectious Diseases' ("NIAID") Project NextGen for inclusion in clinical trials. OCU500 will be tested via two different mucosal routes, inhalation into the lungs and as a nasal spray. The clinical trials are expected to begin in early 2024. The Company is continuing the internal development of its OCU510 and OCU520 platforms to achieve IND readiness and may submit an IND application in 2024, provided it receives government funding. The Company has submitted multiple proposals to obtain government funding and is continuing discussions with relevant government agencies regarding developmental funding for its OCU510 and OCU520 platforms.

Novel Biologic Therapy for Retinal Diseases

The Company is developing OCU200, which is a novel fusion protein containing parts of human transferrin and tumstatin. OCU200 is designed to treat diabetic macular edema ("DME"), diabetic retinopathy ("DR"), and wet AMD. The Company has completed the technology transfer of manufacturing processes to its contract development and manufacturing organization ("CDMO") and has produced trial materials to initiate a Phase 1 trial. In April 2023, the FDA placed the Company's IND application to initiate a Phase 1 trial targeting DME on clinical hold, as part of the FDA's request for additional information related to CMC. The Company is working to provide the FDA with the requested information as promptly as possible. The Company expects initiation of the OCU200 clinical trial in the first half of 2024, contingent on the lift of the FDA hold and adequate availability of funding.

Going Concern

The Company has incurred recurring net losses since inception and has funded its operations to date through the sale of common stock, warrants to purchase common stock, the issuance of convertible notes and debt, and grant proceeds. The Company incurred net losses of approximately $53.6 million and $59.4 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the Company had an accumulated deficit of $266.6 million and cash and cash equivalents totaling $53.5 million. This amount will not meet the Company's capital requirements for the next 12 months after the date that the condensed consolidated financial statements are issued. Due to the inherent uncertainty involved in

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making estimates and the risks associated with the research, development, and commercialization of biotechnology products, the Company may have based this estimate on assumptions that may prove to be wrong, and the Company's operating plan may change as a result of many factors currently unknown to the Company.

The Company is subject to risks, expenses, and uncertainties frequently encountered by companies in its industry. The Company intends to continue its research, development, and commercialization efforts for its product candidates, which will require significant additional funding. If the Company is unable to obtain additional funding in the future and/or its research, development, and commercialization efforts require higher than anticipated capital, there may be a negative impact on the financial viability of the Company. The Company is currently exploring options to fund its operations through public and private placements of equity and/or debt, payments from potential strategic research and development arrangements, sales of assets, licensing and/or collaboration arrangements with pharmaceutical companies or other institutions, funding from the government, particularly for the development of the Company's novel inhaled mucosal vaccine platform, or funding from other third parties. Such financing and funding may not be available at all, or on terms that are favorable to the Company. While Company management believes that it has a plan to fund operations, its plan may not be successfully implemented. Failure to generate sufficient cash flows from operations, raise additional capital, or appropriately manage certain discretionary spending, could have a material adverse effect on the Company's ability to achieve its intended business objectives.

As a result of these factors, together with the anticipated continued spending that will be necessary to continue to research, develop, and commercialize the Company's product candidates, there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued. The condensed consolidated financial statements do not contain any adjustments that might result from the resolution of any of the above uncertainties.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements included herein have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP") and under the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim reporting. The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, that are necessary to present fairly the Company's financial position, results of operations, and cash flows. The condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosures of the Company normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted under the SEC's rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto for the year ended December 31, 2022, included in the Company's Annual Report on Form 10-K filed with the SEC on February 28, 2023 (the "2022 Annual Report"). The condensed consolidated financial statements include the accounts of Ocugen and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

In preparing the condensed consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include those used in the accounting for research and development contracts, including clinical trial accruals, and the fair value measurement of equity instruments.

Cash and Cash Equivalents

The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. Cash equivalents may include bank demand deposits and money market funds that invest primarily in certificates of deposit, commercial paper, and U.S. government agency securities and treasuries. The Company records interest income received on its cash and cash equivalents to other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company recorded $0.7 million and $2.0 million as interest income for the three and nine months ended September 30, 2023, respectively. The Company recorded $0.5 million and $0.6 million as interest income for the three and nine months ended September 30, 2022, respectively.

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Fair Value Measurements

The Company follows the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements ("ASC 820"), which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

The carrying value of certain financial instruments, including cash and cash equivalents, accounts payable, and accrued expenses, approximates their fair value due to the short-term nature of these instruments.

Marketable Securities

The Company accounts for marketable securities in accordance with FASB ASC Topic 320, Investments — Debt and Equity Securities ("ASC 320"). The Company determines the appropriate classification of its investments in debt securities at the time of purchase. Marketable securities with maturities of 90 days or less at the time of purchase are classified as cash equivalents on the condensed consolidated balance sheets. Debt securities are classified as trading securities if the security is bought and held primarily to be sold in the near term. Debt securities are classified as held-to-maturity if management has both the positive intent and ability to hold until the maturity of the security. Debt securities not classified as trading securities or held-to-maturity securities are classified as available-for-sale securities. The Company's marketable securities were previously comprised of debt securities and were classified as available-for-sale securities. The Company's marketable securities matured during the nine months ended September 30, 2023.

Available-for-sale securities are recorded at fair value based on inputs that are observable, either directly or indirectly, such as quoted prices for identical securities in active markets (Level 1) or quoted prices for similar securities in active markets or inputs that are observable (Level 2). Unrealized gains and losses are included in other comprehensive income (loss) in the condensed consolidated statements of operations and comprehensive loss. Amortization of premium or accretion of discount on debt securities are included in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

The Company reviews investments in debt securities for other-than-temporary impairment if the fair value of the investment is less than the amortized cost basis. The assessment for other-than-temporary impairment is performed at the individual security level. To date, the Company has not recognized any impairments with respect to its debt securities.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and cash equivalents. The Company's cash and cash equivalents are held in accounts at financial institutions that may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to significant credit risk beyond the standard credit risk associated with commercial banking relationships.

Leases

The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company, if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company's lease agreements include lease and non-lease components, which the Company has elected not to account for separately for all classes of underlying assets. Lease expense for variable lease components is recognized when the obligation is probable.

The Company currently leases real estate classified as operating leases. Operating leases are included in other assets and operating lease obligations in the Company's condensed consolidated balance sheets. At lease commencement, the Company

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records a lease liability based on the present value of the lease payments over the expected lease term, including any options to extend the lease that the Company is reasonably certain to exercise, and records a corresponding right-of-use lease asset based on the lease liability, adjusted for any lease incentives received and any initial direct costs paid to the lessor prior to the lease commencement date. Lease expense is recognized on a straight-line basis over the lease term and recognized as research and development expense or general and administrative expense based on the underlying nature of the expense. FASB ASC Topic 842, Leases ("ASC 842") requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. The implicit interest rates were not readily determinable in the Company's current operating leases. As such, the incremental borrowing rates were used based on the information available at the commencement dates in determining the present value of lease payments.

The lease term for the Company's leases includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on an index or rate, and amounts probable to be payable under the exercise of an option to purchase the underlying asset, if reasonably certain.

Variable payments not dependent on an index or rate associated with the Company's leases are recognized when the event, activity, or circumstance is probable. Variable payments include the Company's proportionate share of certain utilities and other operating expenses and are presented as operating expenses in the Company's condensed consolidated statements of operations and comprehensive loss in the same line item as expense arising from fixed lease payments.

Impairment of Assets

The Company reviews its assets, including property and equipment, for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. These indicators include, but are not limited to, a significant change in the extent or manner in which an asset is used or its physical condition, a significant decrease in the market price of an asset, or a significant adverse change in the business or the industry that could affect the value of an asset. An asset is tested for impairment by comparing the net carrying value of the asset to the undiscounted net cash flows to be generated from the use and eventual disposition of the asset.

Stock-Based Compensation

The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation — Stock Compensation ("ASC 718"). The Company has issued stock-based compensation awards including stock options and restricted stock units ("RSUs"), and has also accounted for certain issuances of preferred stock and warrants in accordance with ASC 718. ASC 718 requires all stock-based payments, including grants of stock options and RSUs, to be recognized in the condensed consolidated statements of operations and comprehensive loss based on their grant date fair values. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted. For RSUs, the fair value of the RSU is determined by the market price of a share of the Company's common stock on the grant date. The Company recognizes forfeitures as they occur.

Expense related to stock-based compensation awards is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Stock-based compensation awards generally vest over a one to three year requisite service period. Stock options have a contractual term of 10 years. Expense related to stock-based compensation awards is recorded to research and development expense or general and administrative expense based on the underlying function of the individual that was granted the stock-based compensation award. Shares issued upon stock option exercise and RSU vesting are newly-issued common shares.

Estimating the fair value of stock options requires the input of subjective assumptions, including the expected life of the stock option, stock price volatility, the risk-free interest rate, and expected dividends. The assumptions used in the Company's Black-Scholes option-pricing model represent management's best estimates and involve a number of variables, uncertainties, assumptions, and the application of management's judgment, as they are inherently subjective. If any assumptions change, the Company's stock-based compensation expense could be materially different in the future.

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Recently Adopted Accounting Standards

In July 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-03, Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation — Stock Compensation (Topic 718). This standard amends various SEC paragraphs pursuant to the SEC Staff Accounting Bulletin ("SAB") No. 120, SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force Meeting, and SAB Topic 6.B, Accounting Series Release 280 — General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. This standard did not provide any new guidance and was effective immediately. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU No. 2016-13, which had the same effective date and transition date of January 1, 2023. ASU No. 2016-13, as amended, requires that credit losses be reported using an expected losses model rather than the incurred losses model that was previously used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, these standards now require allowances to be recorded instead of reducing the amortized cost of the investment. These standards limit the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. The standard was effective for the Company on January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40). This standard will have an effective and transition date of January 1, 2024. Early adoption is currently permitted. This standard simplifies an issuer's accounting for convertible instruments by eliminating two of the three models that require separate accounting for embedded conversion features as well as simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. This standard also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and includes the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. The standard requires new disclosures about events that occur during the reporting period that cause conversion contingencies to be met and about the fair value of a public business entity's convertible debt at the instrument level, among other things. The Company does not currently expect the adoption of this standard to have a material impact on the Company's condensed consolidated financial statements.

3. Fair Value Measurements

The following table summarizes the fair value and the classification by level of input within the fair value hierarchy of financial assets as of December 31, 2022 that are recurring fair value measurements (in thousands):

As of December 31, 2022

Level 1

Level 2

Level 3

Total

Assets:

Cash and cash equivalents

76,564

SEC Form 10-Q filed by Ocugen Inc.