0001558370-20-009817 | 10-Q | XBRL Viewer

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Aug. 01, 2020
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-36554
Entity Registrant Name	Ocular Therapeutix, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-5560161
Entity Address, Address Line One	24 Crosby Drive
Entity Address, City or Town	Bedford
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01730
City Area Code	781
Local Phone Number	357-4000
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	OCUL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		62,958,001
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001393434
Amendment Flag	false

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 84,294	$ 54,437
Accounts receivable, net	2,874	2,548
Inventory	1,067	954
Prepaid expenses and other current assets	2,058	2,231
Total current assets	90,293	60,170
Property and equipment, net	8,934	10,151
Restricted cash	1,764	1,764
Operating lease assets	6,269	6,655
Total assets	107,260	78,740
Current liabilities:
Accounts payable	2,650	3,268
Accrued expenses and other current liabilities	5,769	7,635
Operating lease liabilities	1,238	1,126
Notes payable, net of discount, current	4,146
Total current liabilities	13,803	12,029
Operating lease liabilities, net of current portion	8,256	8,905
Derivative liability	32,535	12,124
Notes payable, net of discount	20,970	25,007
2026 convertible notes, net	26,352	24,305
Total liabilities	101,916	82,370
Commitments and contingencies (Note 12)
Stockholders' equity (deficit):
Preferred stock, $0.0001 par value; 5,000,000 shares authorized and no shares issued or outstanding at June 30, 2020 and December 31, 2019
Common stock, $0.0001 par value; 100,000,000 shares authorized and 62,953,793 and 50,333,559 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	6	5
Additional paid-in capital	447,033	379,980
Accumulated deficit	(441,695)	(383,615)
Total stockholders' equity (deficit)	5,344	(3,630)
Total liabilities and stockholders' equity (deficit)	$ 107,260	$ 78,740

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue:
Revenue, Product and Service [Extensible List]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Total revenue, net	$ 1,569	$ 650	$ 4,178	$ 1,142
Costs and operating expenses:
Cost, Product and Service [Extensible List]	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember	us-gaap:ProductMember
Cost of product revenue	$ 134	$ 552	$ 953	$ 680
Research and development	8,021	9,414	14,119	20,731
Selling and marketing	6,153	7,225	13,283	10,572
General and administrative	5,145	5,058	10,321	10,416
Total costs and operating expenses	19,453	22,249	38,676	42,399
Loss from operations	(17,884)	(21,599)	(34,498)	(41,257)
Other income (expense):
Interest income	17	379	156	708
Interest expense	(1,694)	(1,627)	(3,327)	(2,645)
Change in fair value of derivative liability	(17,007)	(1,606)	(20,411)	1,617
Total other income (expense), net	(18,684)	(2,854)	(23,582)	(320)
Net loss and comprehensive loss	$ (36,568)	$ (24,453)	$ (58,080)	$ (41,577)
Net loss per share, basic and diluted	$ (0.64)	$ (0.57)	$ (1.06)	$ (0.98)
Weighted average common shares outstanding, basic and diluted	57,368,292	42,910,084	54,634,572	42,582,501

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net loss	$ (58,080)	$ (41,577)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation expense	3,491	3,637
Non-cash interest expense	2,156	1,418
Amortization of operating lease asset		330
Change in fair value of derivative liability	20,411	(1,617)
Depreciation and amortization expense	1,441	1,187
Changes in operating assets and liabilities:
Accounts receivable	(326)	(414)
Prepaid expenses and other current assets	173	(581)
Inventory	(113)	(545)
Right of use asset	386
Accounts payable	(786)	774
Accrued expenses	(1,866)	(869)
Operating lease liabilities	(537)	(310)
Net cash used in operating activities	(33,650)	(38,567)
Cash flows from investing activities:
Purchases of property and equipment	(374)	(1,218)
Net cash used in investing activities	(374)	(1,218)
Cash flows from financing activities:
Proceeds from issuance of 2026 convertible notes, net of issuance costs		37,275
Proceeds from exercise of stock options	506	1
Proceeds from the Paycheck Protection Program Loan	3,201
Repayment of the Paycheck Protection Program Loan	(3,201)
Proceeds from issuance of common stock pursuant to employee stock purchase plan	350	294
Proceeds from issuance of common stock upon public offering, net	63,025	10,068
Net cash provided by financing activities	63,881	47,638
Net increase in cash, cash equivalents and restricted cash	29,857	7,853
Cash, cash equivalents and restricted cash at beginning of period	56,201	60,676
Cash, cash equivalents and restricted cash at end of period	86,058	68,529
Supplemental disclosure of non-cash investing and financing activities:
Additional right of use asset and related lease liability		2,044
Additions to property and equipment included in accounts payable and accrued expenses at balance sheet dates	63	265
Derivative liability in connection with issuance of 2026 convertible notes		14,685
Public offering costs included in accounts payable and accrued expenses at balance sheet dates	$ 318	$ 40

Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2018	$ 4	$ 333,114	$ (297,243)	$ 35,875
Balance, shares at Dec. 31, 2018	41,518,091
Stockholders' (Deficit) Equity
Issuance of common stock upon exercise of stock options		1		1
Issuance of common stock upon exercise of stock options, shares	406
Issuance of common stock upon public offering, net of issuance costs		4,954		4,954
Issuance of common stock upon public offering, net of issuance costs, shares	1,318,481
Stock-based compensation expense		1,942		1,942
Net loss			(17,124)	(17,124)
Balance at Mar. 31, 2019	$ 4	340,011	(314,367)	25,648
Balance, shares at Mar. 31, 2019	42,836,978
Balance at Dec. 31, 2018	$ 4	333,114	(297,243)	35,875
Balance, shares at Dec. 31, 2018	41,518,091
Stockholders' (Deficit) Equity
Net loss				(41,577)
Balance at Jun. 30, 2019	$ 4	347,074	(338,820)	8,258
Balance, shares at Jun. 30, 2019	44,101,583
Balance at Mar. 31, 2019	$ 4	340,011	(314,367)	25,648
Balance, shares at Mar. 31, 2019	42,836,978
Stockholders' (Deficit) Equity
Issuance of common stock in connection with employee stock purchase plan		294		294
Issuance of common stock in connection with employee stock purchase plan, shares	84,238
Issuance of common stock upon public offering, net of issuance costs		5,074		5,074
Issuance of common stock upon public offering, net of issuance costs, shares	1,180,367
Stock-based compensation expense		1,695		1,695
Net loss			(24,453)	(24,453)
Balance at Jun. 30, 2019	$ 4	347,074	(338,820)	8,258
Balance, shares at Jun. 30, 2019	44,101,583
Balance at Dec. 31, 2019	$ 5	379,980	(383,615)	(3,630)
Balance, shares at Dec. 31, 2019	50,333,559
Stockholders' (Deficit) Equity
Issuance of common stock upon exercise of stock options		128		128
Issuance of common stock upon exercise of stock options, shares	46,321
Issuance of common stock upon public offering, net of issuance costs		12,690		12,690
Issuance of common stock upon public offering, net of issuance costs, shares	2,657,823
Stock-based compensation expense		1,665		1,665
Net loss			(21,512)	(21,512)
Balance at Mar. 31, 2020	$ 5	394,463	(405,127)	(10,659)
Balance, shares at Mar. 31, 2020	53,037,703
Balance at Dec. 31, 2019	$ 5	379,980	(383,615)	(3,630)
Balance, shares at Dec. 31, 2019	50,333,559
Stockholders' (Deficit) Equity
Net loss				(58,080)
Balance at Jun. 30, 2020	$ 6	447,033	(441,695)	5,344
Balance, shares at Jun. 30, 2020	62,953,793
Balance at Mar. 31, 2020	$ 5	394,463	(405,127)	(10,659)
Balance, shares at Mar. 31, 2020	53,037,703
Stockholders' (Deficit) Equity
Issuance of common stock upon exercise of stock options		378		378
Issuance of common stock upon exercise of stock options, shares	75,862
Issuance of common stock in connection with employee stock purchase plan		350		350
Issuance of common stock in connection with employee stock purchase plan, shares	104,579
Issuance of common stock upon public offering, net of issuance costs	$ 1	50,016		50,017
Issuance of common stock upon public offering, net of issuance costs, shares	9,735,649
Stock-based compensation expense		1,826		1,826
Net loss			(36,568)	(36,568)
Balance at Jun. 30, 2020	$ 6	$ 447,033	$ (441,695)	$ 5,344
Balance, shares at Jun. 30, 2020	62,953,793

Nature of the Business and Basis of Presentation

6 Months Ended

Jun. 30, 2020

Nature of the Business and Basis of Presentation

Nature of the Business and Basis of Presentation

1. Nature of the Business and Basis of Presentation

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 focused on the formulation, development and commercialization of innovative therapies for diseases and conditions of the eye using its proprietary, bioresorbable hydrogel platform technology. The Company’s product pipeline candidates provide differentiated drug delivery solutions that reduce the complexity and burden of the current standard of care (eye drops) by creating local programmed-release alternatives. Since inception, the Company’s operations have been primarily focused on organizing and staffing the Company, acquiring rights to intellectual property, business planning, raising capital, developing its technology, identifying potential product candidates, undertaking preclinical studies and clinical trials, manufacturing initial quantities of its products and product candidates, building the initial sales and marketing infrastructure for the commercialization of the Company’s approved products and product candidates and launching its initial product.

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, compliance with government regulations, regulatory approval and compliance, reimbursement, uncertainty of market acceptance of products and the need to obtain additional financing. Recently approved products will require significant sales, marketing and distribution support up to and including upon their launch. 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.

As of June 30, 2020, the Company’s lead product, DEXTENZA^® (dexamethasone insert) 0.4mg, has been approved by the FDA and the Company’s other product candidates are in clinical stage development. 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.

As of August 7, 2020, the issuance date of this Quarterly Report on Form 10-Q, the Company believes that its existing cash and cash equivalents of $84,294 as of June 30, 2020, will enable the Company to fund its planned operating expenses, debt service obligations and capital expenditure requirements for at least the next twelve months. This estimate is based on the Company’s currently forecasted operating plan which includes estimates of anticipated cash inflows from DEXTENZA and ReSure Sealant product sales and cash outflows from operating expenses. These estimates are subject to various assumptions including those related to the severity and duration of the COVID-19 pandemic, a continuing expected rebound in cataract surgeries in the third quarter of 2020 and beyond, the revenues and expenses associated with the commercialization of DEXTENZA, variable expense reductions, the pace of the Company’s research and clinical development programs, and other aspects of the Company’s business.

The Company has limited history of commercialization of DEXTENZA and ReSure Sealant and lacks sufficient historical evidence to determine whether it will receive sufficient revenues from its sales of DEXTENZA and ReSure Sealant to fund operations. Therefore, along with its accumulated deficit, history of losses and negative cash flows from operations, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. 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 June 30, 2020, the Company had an accumulated deficit of $441,695.

The future viability of the Company is dependent on its ability to raise capital or reduce spending to finance its operations. The Company expects to seek additional funds through equity offerings, debt financings, government or other third-party funding, collaborations, strategic alliances, licensing arrangements, royalty agreements, and marketing and distribution arrangements. If the Company is unable to obtain financing, the Company would be forced to delay, reduce or eliminate its research and development programs or any future commercialization efforts or to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to the Company. The ability to raise capital and the actions necessary to reduce spending to a level that mitigates the factors described above are not considered probable, as defined in the accounting standards.

The accompanying unaudited interim financial statements of the Company have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying unaudited interim financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the ability to continue as a going concern.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Unaudited Interim Financial Information

The balance sheet at December 31, 2019 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited financial statements as of June 30, 2020 and for the three and six months ended June 30, 2020 and 2019 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“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 financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K on file with the SEC. 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 June 30, 2020 and results of operations and cash flows for the three and six months ended June 30, 2020 and 2019 have been made. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2020.

Risks and Uncertainties

The Company is monitoring the potential impact of COVID-19, if any, on the carrying value of certain assets. To date, the Company has not experienced material business disruption, nor has it incurred impairment of any assets as a result of COVID-19. The extent to which these events may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted at this time. The duration and intensity of the COVID-19 pandemic and any resulting disruption to the Company’s operations is uncertain and the Company will continue to assess the impact of COVID-19 on its financial position.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, revenue recognition and the fair value of derivatives. Additionally, the full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, clinical trials and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national

and international customers and markets. The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

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

●

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

●

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents at June 30, 2020 and December 31, 2019, were carried at fair value determined according to the fair value hierarchy described above (Note 3). The Company’s derivative liability at June 30, 2020 was carried at fair value determined according to the fair value hierarchy described above and classified as a Level 3 measurement. The carrying value of accounts receivable, accounts payable and accrued expenses approximate their fair value due to the short-term nature of these assets and liabilities.

The carrying value of the Company’s variable interest rate notes payable (Note 8) are recorded at amortized costs, which approximates fair value due to their short-term nature.

On March 1, 2019, the Company issued $37,500 aggregate principal amount of unsecured senior subordinated convertible notes (the “2026 Convertible Notes”) (Note 5) and this is carried, net of derivative liability, at its amortized cost of $26,352 at June 30, 2020. The estimated fair value of the 2026 Convertible Notes was $58,222 at June 30, 2020. The fair value of the 2026 Convertible Notes was estimated utilizing a binomial lattice model which requires the use of Level 3 unobservable inputs. The main input when determining the fair value for disclosure purposes is the bond yield which is updated each period to reflect the yield of a comparable instrument issued as of the valuation date. The estimated fair value presented is not necessarily indicative of an amount that could be realized in a current market exchange. The use of alternative inputs and estimation methodologies could have a material effect on these estimates of fair value.

Revenue Recognition

The Company recognizes product revenue from DEXTENZA for the treatment of post-surgical ocular inflammation and pain, which it began selling to customers in June 2019, and ReSure Sealant. The Company has generated limited revenues from ReSure Sealant to date and does not expect significant future sales.

In November 2018, the FDA approved DEXTENZA for the treatment of ocular pain following ophthalmic surgery. The Company entered into a limited number of arrangements with specialty distributors in the United States to distribute DEXTENZA. The Company recognizes revenue in accordance with Accounting Standards Codification 606 – Revenue from Contracts with Customers (“Topic 606”). Topic 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to arrangements that meet the definition of a contract with a customer under Topic 606, including when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for product revenue, see Product Revenue, Net (below).

Product Revenue, Net— The Company derives its product revenues from the sale of DEXTENZA in the United States to customers, which includes a limited number of specialty distributors, who then subsequently resell DEXTENZA to physicians, clinics and certain medical centers or hospitals. In addition to distribution agreements with customers, the Company enters into arrangements with government payers that provide for government mandated rebates and chargebacks with respect to the purchase of DEXTENZA.

The Company recognizes revenue on product sales when the customer obtains control of the Company's product, which occurs at a point in time (upon delivery to the customer). The Company has determined that the delivery of DEXTENZA to its customers constitutes a single performance obligation. There are no other promises to deliver goods or services beyond what is specified in each accepted customer order. The Company has assessed the existence of a significant financing component in the agreements with its customers. The trade payment terms with the Company’s customers do not exceed one year and therefore the Company has elected to apply the practical expedient and no amount of consideration has been allocated as a financing component. Product revenues are recorded net of applicable reserves for variable consideration, including rebates, discounts and allowances.

Transaction Price, including Variable Consideration— Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, government chargebacks, discounts and rebates, and other incentives, such as voluntary patient assistance, and other fee-for-service amounts that are detailed within contracts between the Company and its customers relating to the Company’s sale of DEXTENZA. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer). These estimates take into consideration a range of possible outcomes which are probability-weighted in accordance with the expected value method in Topic 606 for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price, only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s original estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

Trade Discounts and Allowances—The Company compensates (through trade discounts and allowances) its customers for sales order management, data, and distribution services. However, the Company has determined such services received to date are not distinct from the Company’s sale of products to the customer and, therefore, these payments have been recorded as a reduction of revenue within the statement of operations and comprehensive loss through June 30, 2020, as well as a reduction to accounts receivables, net on the consolidated balance sheets.

Product Returns— Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company in certain circumstances as further discussed below. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a

reduction of revenue in the period the related product revenue is recognized, as well as within accrued expenses and other current liabilities, in the accompanying consolidated balance sheets. The Company currently estimates product return reserves using available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. The Company believes the returns of DEXTENZA will be minimal.

The Company’s limited right of return allows for eligible returns of DEXTENZA in the following circumstances:

●

Shipment errors that were the result of an error by the Company;

●

Quantity delivered that is greater or less than the quantity ordered;

●

Product distributed by the Company that is damaged in transit prior to receipt by the customer;

●

Product from physicians, clinics, medical centers and hospitals that was not administered to the patient that is rendered non-usable due to spoilage or mishandling;

●

Expired product, previously purchased directly from the Company, that is returned during the period beginning six months prior to the product’s expiration date and ending twelve months after the product’s expiration date;

●

Product subject to a recall; and

●

Product that the Company, at its sole discretion, has specified to be returned.

Government Chargebacks— Chargebacks for fees and discounts to qualified government healthcare providers represent the estimated obligations resulting from contractual commitments to sell products to qualified U.S. Department of Veterans Affairs hospitals and 340B entities at prices lower than the list prices charged to customers who directly purchase the product from the Company. The 340B Drug Discount Program is a U.S. federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices. Customers charge the Company for the difference between what they pay for the product and the statutory selling price to the qualified government entity. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivables, net. Chargeback amounts are generally determined at the time of resale to the qualified government healthcare provider by customers, and the Company generally issues credits for such amounts within a few weeks of the Customer’s notification to the Company of the resale. Reserves for chargebacks consist of credits that the Company expects to issue for units that remain in the distribution channel inventories at each reporting period-end that the Company expects will be sold to qualified healthcare providers, and chargebacks that customers have claimed, but for which the Company has not yet issued a credit.

Government Rebates— The Company is subject to discount obligations under state Medicaid programs and Medicare. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program. For Medicaid programs, the Company estimates the portion of sales attributed to Medicaid patients and records a liability for the rebates to be paid to the respective state Medicaid programs. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period.

Other Incentives— Other incentives which the Company offers include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue but remains in the distribution channel inventories at the end of each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a

reduction of product revenue and the establishment of a current liability which is included as accrued expenses and other current liabilities on the consolidated balance sheets.

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. The Company has all cash and cash equivalents balances at one accredited financial institution, 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 sales of its product sales could be adversely affected by a significant interruption in the supply of any of the components of these products.

For the three and six months ended June 30, 2020, three individual customers accounted for 48%, 16% and 14% and 41%, 19% and 14%, respectively, of the Company’s total revenue. At June 30, 2020, three customers accounted for 48%, 21% and 16% of the Company’s total accounts receivable. No other customer accounted for more than 10% of total revenue or accounts receivable at June 30, 2020.

For the three and six months ended June 30, 2019, one individual customer accounted for 40% and 24%, respectively, of the Company’s total revenue. At December 31, 2019, three customers accounted for 39%, 18% and 11% of the Company’s total accounts receivable. No other customer accounted for more than 10% of total accounts receivable for the year ended December 31, 2019.

Inventory

The Company values its inventories at the lower of cost or estimated net realizable value.

Inventory consisted of the following:


	June 30,		December 31,
	2020		2019
Raw materials	$	235	$	217
Work-in-process		106		148
Finished goods		726		589
	$	1,067	$	954

Derivative Liability

The 2026 Convertible Notes allow the holders to convert all or part of the outstanding principal of their 2026 Convertible Notes into shares of the Company’s common stock provided that no conversion results in a holder beneficially owning more than 19.99% of the issued and outstanding common stock of the Company. The entire embedded conversion option is required to be separated from the 2026 Convertible Notes and accounted for as a freestanding derivative instrument subject to derivative accounting. Therefore, the entire conversion option is bifurcated from the underlying debt instrument and accounted for and valued separately from the host instrument. The Company measures the value of the embedded conversion option at its estimated fair value and recognizes changes in the estimated fair value in other income (expense), net in the consolidated statements of operations and comprehensive loss during the period of change. The embedded conversion is recognized as a derivative liability in the Company’s consolidated balance sheet.

Restricted Cash

The Company held restricted cash of $1,764 at June 30, 2020 and December 31, 2019, on its consolidated balance sheet.

The Company’s 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 sheet that sum to the total of the same amounts shown in the statement of cash flows is as follows:


	June 30,		June 30,		December 31,
	2020		2019		2019
Cash and cash equivalents	$	84,294	$	61,765	$	54,437
Restricted cash		1,764		6,764		1,764
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$	86,058	$	68,529	$	56,201

Net Loss Per Share

The Company follows the two-class method when computing net loss per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based on their respective rights to receive dividends as if all income for the period had been distributed.

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities, including the assumed conversion of the Company’s 2026 Convertible Notes and the exercise of outstanding stock options and common stock warrants, except where the result would be anti-dilutive. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of the conversion of the 2026 Convertible Notes and the exercise of outstanding stock options and common stock warrants. In the diluted net loss per share calculation, net loss would also be adjusted for the elimination of interest expense on the 2026 Convertible Notes (which includes amortization of the discount created upon bifurcation of the conversion option from the debt) and, the mark-to-market gain or loss each period to the bifurcated conversion option, if the impact was not anti-dilutive.

Recently Issued and Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This standard modifies certain disclosure requirements on fair value measurements. This standard became effective for the Company on January 1, 2020 and did not have a material impact on the Company’s disclosures.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (“ASU 2018-18”). ASU 2018-18 makes targeted improvements to GAAP for collaborative arrangements, including (i) clarification that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account, (ii) adding unit-of-account guidance in ASC 808, Collaborative Arrangements, to align with the guidance in ASC 606 and (iii) a requirement that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under ASC 606 is precluded if the collaborative arrangement participant is not a customer. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. This standard became effective for the Company on January 1, 2020 and the adoption of ASU 2018-18 did not have a material impact on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued amendments to accounting guidance that simplify the accounting for income taxes, as part of its initiative to reduce complexity in the accounting standards. The amendments eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The amendments also clarify and simplify other aspects of the accounting for income taxes. The Company early adopted the amendments as of January 1, 2020, on a prospective basis. The amendments did not have a significant impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (‘‘ASU 2016-13’’), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes may result in earlier recognition of credit losses. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which narrowed the scope and changed the effective date for non-public entities for ASU 2016-13. The FASB subsequently issued supplemental guidance within ASU No. 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief (‘‘ASU 2019-05’’). ASU 2019-05 provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For public entities that are Securities and Exchange Commission filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. This standard will be effective for the Company on January 1, 2023. The Company is currently evaluating the potential impact that this standard may have on its condensed consolidated financial statements and related disclosures.

Fair Value of Financial Assets and Liabilities

6 Months Ended

Jun. 30, 2020

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

3. 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 June 30, 2020 and December 31, 2019 and indicate the level of the fair value hierarchy utilized to determine such fair value:


	Fair Value Measurements as of
	June 30, 2020 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	82,361	$	—	$	82,361

Liability:
Derivative liability (Note 4)		—		—		32,535		32,535
Total	$	—	$	82,361	$	32,535	$	114,896


	Fair Value Measurements as of
	December 31, 2019 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	45,156	$	—	$	45,156

Liability:
Derivative liability (Note 4)		—		—		12,124		12,124
Total	$	—	$	45,156	$	12,124	$	57,280

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Convertible Notes

6 Months Ended

Jun. 30, 2020

Convertible Notes

Convertible Notes

5. Convertible Notes

On March 1, 2019, the Company issued $37,500 of 2026 Convertible Notes. Each 2026 Convertible Note accrues interest at an annual rate of 6% of its outstanding principal amount, which is payable, along with the principal amount at maturity, on March 1, 2026, unless earlier converted, repurchased or redeemed. The Company includes the deferred interest in the balance of the 2026 Convertible Notes on its consolidated balance sheet. The effective annual interest rate for the 2026 Convertible Notes was 14.8% through June 30, 2020.

The holders of the 2026 Convertible Notes may convert all or part of the outstanding principal amount of their 2026 Convertible Notes into shares of the Company’s common stock, par value $0.0001 per share, prior to maturity and provided that no conversion results in a holder beneficially owning more than 19.99% of the issued and outstanding common stock of the Company. The conversion rate is initially 153.8462 shares of the Company’s common stock per $1,000 principal amount of the 2026 Convertible Notes, which is equivalent to an initial conversion price of $6.50 per share. The conversion rate is subject to adjustment in customary circumstances such as stock splits or similar changes to the Company’s capitalization.

At its election, the Company may choose to make such conversion payment in cash, in shares of common stock, or a combination thereof. Upon any conversion of any 2026 Convertible Note, the Company is obligated to make a cash payment to the holder of such 2026 Convertible Note for any interest accrued but unpaid on the principal amount converted. Upon the occurrence of a Corporate Transaction (as defined below), each holder has the option to require the Company to repurchase all or part of the outstanding principal amount of such note at a repurchase price equal to 100% of the outstanding principal amount of the 2026 Convertible Note to be repurchased, plus accrued and unpaid interest to, but excluding the repurchase date. In addition, each holder is entitled to receive an additional make-whole cash payment in accordance with a table set forth in each 2026 Convertible Note.

Upon conversion by the holder, the Company has the right to select the settlement of the conversion in shares of common stock, cash, or in a combination thereof. In addition, the Company is obligated to make a cash payment to the holder of such 2026 Convertible Note for any interest accrued but unpaid on the principal amount converted.

●

If the Company elects to satisfy such conversion by shares of common stock, the Company shall deliver to the converting holder in respect of each $1,000 principal amount of 2026 Convertible Notes

being converted a number of common shares equal to the conversion rate in effect on the conversion date;

●

If the Company elects to satisfy such conversion by cash settlement, the Company shall pay to the converting holder in respect of each $1,000 principal amount of 2026 Convertible Notes being converted cash in an amount equal to the sum of the Daily Conversion Values (as defined below) for each of the twenty (20) consecutive trading days during a specified period. The “Daily Conversion Values” is defined as each of the 20 consecutive trading days during the specified period, 5.0% of the product of (a) the conversion rate on such trading day and (b) the Daily VWAP on such trading day. The Daily VWAP is defined as each of the 20 consecutive trading days during the applicable Observation Period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on the Bloomberg page for the Company.

●

If the Company elects to satisfy such conversion by combination, the Company shall pay or deliver, as the case may be, in respect of each $1,000 principal amount of 2026 Convertible Notes being converted, a settlement amount equal to the sum of the Daily Settlement Amounts (as defined below) for each of the twenty (20) consecutive trading days during the specified period. The “Daily Settlement Amount” is defined as, for each of the 20 consecutive trading days during the specified period: (a) cash in an amount equal to the lesser of (i) the Daily Measurement Value (as defined below) and (ii) the Daily Conversion Value on such Trading Day; and (b) if the Daily Conversion Value on such trading day exceeds the Daily Measurement Value, a number of Shares equal to (i) the difference between the Daily Conversion Value and the Daily Measurement Value, divided by (ii) the Daily VWAP for such Trading Day. The “Daily Measurement Value” is defined as the Specified Dollar Amount (as defined below), if any, divided by 20. The “Specified Dollar Amount” is defined as the maximum cash amount per $1,000 principal amount of Notes to be received upon conversion as specified in the notice specifying the Company’s chosen settlement method.

In the event of a Corporate Transaction, the noteholder shall have the right to either (a) convert all of the unpaid principal at the conversion rate and receive a cash payment equal to (i) the outstanding accrued but unpaid interest under the 2026 Convertible Note to, but excluding, the corporate transaction conversion date (to the extent such date occurs prior to March 1, 2026, the maturity date of the 2026 Convertible Notes) plus (ii) and an additional amount of consideration based on a sliding scale depending on the date of such as Corporate transaction or (b) require the Company to repurchase all or part of the outstanding principal amount of such 2026 Convertible Note at a repurchase price equal to 100% of the outstanding principal amount of the 2026 Convertible Note to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

A corporate transaction includes (i) a merger or consolidation executed through a tender offer or change of control (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation); (ii) a sale, lease, transfer, of all or substantially all of the assets of the Company; or (iii) if the Company’s common stock ceases to be listed or quoted on any of the New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market (the “Corporate Transaction”).

On or after March 1, 2022, if the last reported sale price of the common stock has been at least 130% of the conversion rate then in effect for 20 of the preceding 30 trading days (including the last trading day of such period), the Company is entitled, at its option, to redeem all or part of the outstanding principal amount of the 2026 Convertible Notes, on a pro rata basis, at an optional redemption price equal to 100% of the outstanding principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the optional redemption date.

The 2026 Convertible Notes are subject to acceleration upon the occurrence of specified events of default, including a default or breach of certain contracts material to the Company and the delisting and deregistration of the Company’s common stock.

As discussed in Note 4, the Company determined that the embedded conversion option is required to be separated from the 2026 Convertible Notes and accounted for as a freestanding derivative instrument subject to derivative accounting. The allocation of proceeds to the conversion option results in a discount on the 2026 Convertible Notes. The Company is amortizing the discount to interest expense over the term of the 2026 Convertible Notes using the effective interest method.

A summary of the 2026 Convertible Notes at June 30, 2020 is as follows:


	June 30,
	2020
2026 Convertible Notes	$	37,500
Less: unamortized discount		(14,192)
		23,308
Accrued interest		3,044
Total	$	26,352

Notes Payable

6 Months Ended

Jun. 30, 2020

Notes Payable

Notes payable

8. Notes Payable

The Company entered into a credit and security agreement in 2014 (as amended to date, the “Credit Agreement”) establishing the Company’s credit facility (the “Credit Facility”). The Company has a total borrowing capacity of $25,000 under the Credit Facility which has been fully drawn down as of June 30, 2020.

In December 2018, the Company amended the terms of the Credit Agreement to increase total indebtedness under the Credit Facility to $25,000, which was used primarily to pay-off outstanding balances as of the closing date. The Company is required to make interest-only payments under the Credit Facility until December 2020. Commencing in January 2021, the Company is required to make 36 equal monthly installments of principal in the amount of $694, plus interest, through December 2023. In the event the Company achieves certain milestones under the Credit Agreement, the Company has the right to extend the interest-only payments through December 21, 2021 and make 24 equal monthly installments of principal in the amount of $1,042, plus interest. The Company has not assumed the achievement of these milestones for purposes of disclosures herein.

Amounts borrowed under the Credit Facility are at LIBOR base rate, subject to 2.00% floor, plus 7.25%. The interest rate on the date of the amendment was 9.76%. In addition, a final payment (exit fee) equal to 3.5% of amounts drawn under the Credit Facility, or $875 based on borrowings of $25,000, is due upon the maturity date of December 21, 2023. The Company is accruing the exit fee through December 21, 2023.

There are no financial covenants associated with the Credit Agreement. However, the Credit Agreement does contain negative covenants restricting the Company’s activities, including limitations on dispositions, mergers or acquisitions; encumbering its intellectual property; incurring indebtedness or liens; paying dividends; making certain investments; and engaging in certain other business transactions. The Company is not in violation of any of its covenants under the Credit Agreement. The obligations under the Credit Agreement are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in the Company’s business, operations or financial or other condition. The debt is collateralized by substantially all of the Company’s assets, including its intellectual property.

In accordance with the Credit Agreement, in connection with the Company’s desire to issue and sell the 2026 Convertible Notes, the Company amended the terms of its debt with existing lenders in February 2019. The amendment added to the Credit Agreement, among other provisions, a negative covenant restricting the Company from paying the holders of the 2026 Convertible Notes ahead in priority to the existing lenders, for so long as indebtedness remains outstanding under the Credit Facility, and a cross-default provision to establish that an event of default under the purchase agreement for the 2026 Convertible Notes also constitutes an event of default under the Credit Agreement.

Borrowings outstanding are as follows:


	June 30,		December 31,
	2020		2019
Borrowings outstanding	$	25,000	$	25,000
Accrued exit fee		267		180
Unamortized discount		(151)		(173)
		25,116		25,007
Less: current portion		(4,146)		—
Long-term notes payable	$	20,970	$	25,007

As of June 30, 2020, the annual repayment requirements for the Credit Facility, inclusive of the final payment of $875 due at expiration, were as follows:



			Interest and
Year Ending December 31,	Principal		Final Payment		Total
2020 (July 1 through December 31)	$	—	$	1,247	$	1,247
2021		8,333		2,094		10,427
2022		8,333		1,270		9,603
2023		8,334		1,320		9,654
	$	25,000	$	5,931	$	30,931

Interest paid amounted to $1,176 and $1,227 for the six months ended June 30, 2020 and 2019, respectively.

On April 22, 2020, in accordance with the Credit Agreement, the Company obtained consent from MidCap Financial Trust permitting the Company to secure a loan under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Stability Act. The Company received loan proceeds of $3,201 (the “PPP Loan”) on April 23, 2020 pursuant to this program. However, based on updated guidance related to this program, the Company repaid the PPP Loan in full on May 5, 2020.

Stock-Based Awards

6 Months Ended

Jun. 30, 2020

Stock-Based Awards

Stock-Based Awards

11. Stock-Based Awards

2014 Stock Incentive Plan

The 2014 Stock Incentive Plan (the “2014 Plan”) provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based awards. The number of shares of common stock that may be issued under the 2014 Plan is subject to increase on the first day of each fiscal year, beginning on January 1, 2015 and ending on December 31, 2024 in an amount equal to the lesser of a pre-determined formula or as determined by the Company’s board of directors. On January 1, 2020, the number of shares available for issuance under the 2014 Plan was increased by 1,659,218. During the three and six months ended June 30, 2020, the Company granted options to purchase 126,100 and 1,816,950 shares of common stock, respectively, at a weighted exercise price of $8.58 and $4.69 per share, respectively. As of June 30, 2020, 823,571 shares remained available for issuance under the 2014 Plan.

2014 Employee Stock Purchase Plan

The Company has a 2014 Employee Stock Purchase Plan (the “ESPP”). The number of shares of common stock that may be issued under the ESPP will automatically increase on the first day of each fiscal year, commencing on January 1, 2015 and ending on December 31, 2024 in an amount equal to the lesser of a pre-determined formula or as determined by the Company’s board of directors. On January 1, 2020, the number of shares available for issuance under the 2014 Plan was increased by 207,402. During the three and six months ended June 30, 2020, 104,579 shares of common stock were issued under the ESPP. As of June 30, 2020, 580,790 shares remained available for issuance under the ESPP.

Inducement Stock Option Awards

The Company has a 2019 Inducement Stock Incentive Plan (the “Inducement Plan”), which became effective and was approved by the Board of Directors of the Company on October 29, 2019. Awards under the Inducement Plan may only be granted to persons who (a) were not previously an employee or director of the Company or (b) are commencing employment with the Company following a bona fide period of non-employment, in either case as an inducement material to the individual’s entering into employment with the Company and in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4). For the avoidance of doubt, neither consultants nor advisors shall be eligible to participate in the Inducement Plan. Each person who is granted an Award under the Inducement Plan is deemed a “Participant.” The Inducement Plan provides for the following types of awards, each of which is referred to as an “Award”: non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The number of shares of common stock that may be issued under the Inducement Plan is 500,000. As of June 30, 2020, 446,000 shares of common stock remained available for issuance under the Inducement Plan.

Stock-based Compensation

The Company recorded stock-based compensation expense related to stock options in the following expense categories of its statements of operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Research and development	$	362	$	593	$	737	$	1,213
Selling and marketing		433		238		804		458
General and administrative		1,031		864		1,950		1,966
	$	1,826	$	1,695	$	3,491	$	3,637

As of June 30, 2020, the Company had an aggregate of $13,121 of unrecognized stock-based compensation cost, which is expected to be recognized over a weighted average period of 2.5 years.

As of June 30, 2020, there were 12,000 outstanding unvested service-based stock options held by nonemployees for the purchase of common stock.

Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies.

Commitments and Contingencies

12. Commitments and Contingencies

Intellectual Property Licenses

The Company has a license agreement with Incept, LLC (“Incept”) to use and develop certain patent rights (the “Incept License”). Under the Incept License, as amended and restated, the Company was granted a worldwide, perpetual, exclusive license 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. Any of the Company’s sublicensees also will be obligated to pay Incept a royalty equal to a low single-digit percentage of net sales made by it and will be bound by the terms of the agreement to the same extent as the Company. The Company is obligated to reimburse Incept for its share of the reasonable fees and costs incurred by Incept in connection with the prosecution of the patent applications licensed to the Company under the Incept License.

On September 13, 2018, the Company entered into a second amended and restated license agreement (the “Second Amended Agreement”) with Incept. The Second Amended Agreement amends and restates in full the Company’s prior amended and restated Incept License to expand the scope of the Company’s intellectual property license and modify future intellectual property ownership and other rights thereunder. Through June 30, 2020, royalties paid under this agreement related to product sales were $434 and have been charged to cost of product revenue.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and senior management team that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of June 30, 2020.

Purchase Commitments

Purchase commitments represent non-cancelable contractual commitments associated with certain clinical trial activities within the Company’s clinical research organization.

Manufacturing Commitments

Manufacturing contracts generally provide for termination on notice, and therefore are cancelable contracts but are contracts that the Company is likely to continue, regardless of the fact that they are cancelable.

Collaboration Agreement

On October 10, 2016, the Company entered into the Collaboration Agreement with Regeneron, which the parties amended in May 2020 (Note 7). If the Option to enter into an exclusive worldwide license is exercised, Regeneron will conduct further preclinical development and an initial clinical trial under a collaboration plan. The Company is obligated to reimburse Regeneron for certain development costs incurred by Regeneron under the collaboration plan during the period through the completion of the initial clinical trial, subject to a cap of $25,000, which cap may be increased by up to $5,000 under certain circumstances; the timing of such payments are not known. If Regeneron elects to proceed with further development following the completion of the collaboration plan, it will be solely responsible for conducting and funding further development and commercialization of product candidates. If the Option is exercised, Regeneron is required to use commercially reasonable efforts to research, develop and commercialize at least one Licensed Product. Such efforts shall include initiating the dosing phase of a subsequent clinical trial within specified time periods following the completion of the first-in-human clinical trial or the initiation of preclinical toxicology studies, subject to certain extensions.

Legal Proceedings

Securities Class Actions

On July 7, 2017, a putative class action lawsuit was filed against the Company and certain of the Company’s current and former executive officers in the United States District Court for the District of New Jersey, captioned Thomas Gallagher v. Ocular Therapeutix, Inc, et al., Case No. 2:17-cv-05011. The complaint purports to be brought on behalf of shareholders who purchased the Company’s common stock between May 5, 2017 and July 6, 2017. The complaint generally alleges that the Company and certain of the Company’s current and former officers violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the Form 483 issued by the FDA related to DEXTENZA and the Company’s manufacturing operations for DEXTENZA. The complaint seeks unspecified damages, attorneys’ fees, and other costs. On July 14, 2017, an amended complaint was filed; the amended complaint purports to be brought on behalf of shareholders who purchased the Company’s common stock between May 5, 2017 and July 11, 2017, and otherwise includes allegations similar to those made in the original complaint.

On July 12, 2017, a second putative class action lawsuit was filed against the Company and certain of the Company’s current and former executive officers in the United States District Court for the District of New Jersey,

captioned Dylan Caraker v. Ocular Therapeutix, Inc., et al., Case No. 2:17-cv-05095. The complaint purports to be brought on behalf of shareholders who purchased the Company’s common stock between May 5, 2017 and July 6, 2017. The complaint includes allegations similar to those made in the Gallagher complaint, and seeks similar relief.

On August 3, 2017, a third putative class action lawsuit was filed against the Company and certain of the Company’s current and former executive officers in the United States District Court for the District of New Jersey, captioned Shawna Kim v. Ocular Therapeutix, Inc., et al., Case No. 2:17-cv-05704. The complaint purports to be brought on behalf of shareholders who purchased the Company’s common stock between March 10, 2016 and July 11, 2017. The complaint includes allegations similar to those made in the Gallagher complaint, and seeks similar relief.

On October 27, 2017, a magistrate judge for the United States District Court for the District of New Jersey granted the defendants’ motion to transfer the above-referenced Gallagher, Caraker, and Kim litigations to the United States District Court for the District of Massachusetts. These matters were assigned the following docket numbers in the District of Massachusetts: 1:17-cv-12288 (Gallagher), 1:17-cv-12146 (Caraker), and 1:17-cv-12286 (Kim).

On March 9, 2018, the court consolidated the three actions and appointed co-lead plaintiffs and co-lead counsel for the consolidated action. On May 7, 2018, co-lead plaintiffs filed a consolidated amended class action complaint. The amended complaint makes allegations similar to those in the original complaints, against the same defendants, and seeks similar relief on behalf of shareholders who purchased the Company’s common stock between March 10, 2016 and July 11, 2017. The amended complaint generally alleges that defendants violated Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. On July 6, 2018, defendants filed a motion to dismiss the consolidated amended complaint. Plaintiffs filed an opposition to the motion to dismiss on September 4, 2018, and defendants filed a reply on October 4, 2018. The court held oral argument on the motion to dismiss on February 6, 2019. By order dated April 30, 2019, the court granted defendants’ motion to dismiss. On May 31, 2019, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the First Circuit regarding the District Court’s opinion and order of dismissal of the Complaint. The First Circuit held an oral argument on the appeal on February 4, 2020. The First Circuit issued its decision on April 9, 2020, affirming the District Court’s dismissal of the class action. The plaintiffs’ deadline to file a petition for a writ of certiorari in the United States Supreme Court is September 4, 2020.

The Company denies any allegations of wrongdoing and intends to vigorously defend against these lawsuits.

Shareholder Derivative Litigation

On July 11, 2017, a purported shareholder derivative lawsuit was filed against certain of the Company’s current and former executive officers, certain current and former board members, and the Company as a nominal defendant, in the United States District Court for the District of Massachusetts, captioned Robert Corwin v. Sawhney et al., Case No. 1:17-cv-11270. The complaint generally alleged that the individual defendants breached fiduciary duties owed to the Company by making allegedly false and/or misleading statements concerning the Form 483 related to DEXTENZA and our manufacturing operations for DEXTENZA. The complaint purported to assert claims against the individual defendants for breach of fiduciary duty, and sought to recover on behalf of the Company for any liability the Company incurs as a result of the individual defendants’ alleged misconduct. The complaint also sought contribution on behalf of the Company from all individual defendants for their alleged violations of Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The complaint sought declaratory, equitable, and monetary relief, an unspecified amount of damages, with interest, and attorneys’ fees and costs. On September 20, 2017, counsel for the plaintiff filed a notice of voluntary dismissal, stating that the plaintiff wished to coordinate his efforts and proceed in a consolidated fashion with the plaintiff in a similar derivative suit that was pending in the Superior Court of Suffolk County of the Commonwealth of Massachusetts captioned Angel Madera v. Sawhney et al., Case. No. 17-2273 (which is discussed in the paragraph immediately below) by filing an action in that court subsequent to the dismissal of this lawsuit. The Corwin lawsuit was dismissed without prejudice on September 21, 2017. On October 24, 2017, the plaintiff filed a new derivative complaint in Massachusetts Superior Court (Suffolk County), captioned Robert Corwin v. Sawhney et al., Case No. 17-3425 (BLS2). The new Corwin complaint includes allegations similar to those made in the federal court complaint and asserts a derivative claim for breach of fiduciary duty against certain of our current and former officers and directors. The complaint also asserts an unjust enrichment claim against two additional defendants, SV Life Sciences Fund IV, LP and SV Life Sciences Fund IV Strategic Partners, LP. The complaint also names the Company as a nominal defendant.

On July 19, 2017, a second purported shareholder derivative lawsuit was filed against certain of the Company’s current and former executive officers, certain current board members, certain former board members, and the Company as a nominal defendant, in the Superior Court of Suffolk County of the Commonwealth of Massachusetts, captioned Angel Madera v. Sawhney et al., Case. No. 17-2273. The complaint included allegations similar to those made in the Corwin complaint. The complaint purported to assert derivative claims against the individual defendants for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, and sought to recover on behalf of the Company for any liability the Company incurs as a result of the individual defendants’ alleged misconduct. The complaint sought declaratory, equitable, and monetary relief, an unspecified amount of damages, with interest, and attorneys’ fees and costs. On November 6, 2017, the court dismissed this action without prejudice due to plaintiff’s failure to complete service of process within the time permitted under applicable court rules. On December 21, 2017, the same plaintiff filed a new derivative complaint in the same court, captioned Angel Madera v. Sawhney et al., Case. No. 17-4126 (BLS2). The new Madera complaint is premised on substantially similar allegations as the previous complaint and purports to assert derivative claims against certain current and former executive officers and board members for breach of fiduciary duty, unjust enrichment, and waste of corporate assets, and names the Company as a nominal defendant. Like the new Corwin complaint, the new Madera complaint also asserts an unjust enrichment claim against two additional defendants, SV Life Sciences Fund IV, LP and SV Life Sciences Fund IV Strategic Partners, LP.

By order dated January 29, 2018, the court consolidated the state court Corwin and Madera complaints under the Corwin docket and appointed lead counsel for plaintiffs. On February 28, 2018, plaintiffs filed a consolidated amended complaint. The consolidated complaint names substantially the same defendants and is premised on substantially similar allegations as the previous Corwin and Madera complaints, asserting claims for breach of fiduciary duty against the individual defendants and unjust enrichment against the two SV entity defendants. On April 17, 2018, all defendants served a motion to dismiss the consolidated amended complaint. On June 22, 2018, plaintiffs served their opposition to the motion to dismiss and a cross-motion to stay the proceedings pending a decision on the motion to dismiss in the above-referenced securities class action in the District of Massachusetts. On July 30, 2018, the parties filed a joint motion to stay the proceedings pending a decision on the motion to dismiss in the above-referenced securities class action in the District of Massachusetts. On August 3, 2018, the court granted the motion to stay.

On January 31, 2018, a third purported shareholder derivative suit was filed against certain of the Company’s current and former executive officers, certain current and former board members, and the Company as a nominal defendant, in the United States District Court for the District of Massachusetts, captioned Brian Robinson v. Sawhney et al., Case. No. 1:18-cv-10199. The complaint includes allegations similar to those made in the Corwin and Madera complaints. The complaint does not name either SV Life Sciences Fund, IV, LP or SV Life Sciences Fund IV Strategic Partners, LP as defendants, and adds two former officers as defendants. The complaint purports to assert derivative claims against the individual defendants for breach of fiduciary duty, waste of corporate assets, and unjust enrichment, and seeks to recover on behalf of the Company for any liability the Company incurs as a result of the individual defendants’ alleged misconduct. The complaint seeks declaratory, equitable, and monetary relief, an unspecified amount of damages, with interest, and attorneys’ fees and costs. On April 30, 2018, all defendants filed a motion to dismiss or stay the complaint. Plaintiff filed his opposition on June 22, 2018. On July 26, 2018, the parties filed a joint motion to extend the deadline for defendants to file their reply brief pending the potential substitution of the named shareholder plaintiff. On August 20, 2018, the parties filed a joint stipulation and proposed order regarding plaintiff’s unopposed request to substitute a new shareholder plaintiff and the parties’ joint request that the court stay the proceedings pending a decision on the motion to dismiss in the above-referenced securities class action in the District of Massachusetts. On September 4, 2018, the court entered the requested order substituting the named plaintiff and staying the matter.

On February 16, 2018, a fourth purported shareholder derivative suit was filed against certain of the Company’s current and former executive officers, certain current and former board members, and the Company as a nominal defendant, in the United States District Court for the District of Delaware, captioned Terry Kelly v. Sawhney et al., Case. No. 1:18-cv-00277. The complaint includes allegations similar to those made in the Corwin and Madera complaints. The complaint purports to assert derivative claims against the individual defendants for breach of fiduciary duty, unjust enrichment and waste of corporate assets, and seeks to recover on behalf of the Company for any liability the Company incurs as a result of the individual defendants’ alleged misconduct. The complaint also asserts an unjust enrichment claim against SV Life Sciences Fund IV, LP and SV Life Sciences Fund IV Strategic Partners, LP. The complaint seeks declaratory, equitable, and monetary relief, an unspecified amount of damages, with interest, and attorneys’ fees and costs. On June 11, 2018, the parties filed a stipulation staying the lawsuit pending final judgment in the consolidated

derivative action pending in Massachusetts state court under the Corwin docket, described above. The court entered an order staying the case on June 12, 2018.

The Company denies any allegations of wrongdoing and intend to vigorously defend against these lawsuits.

The Company is unable to predict the outcome of these lawsuits or proceedings at this time. Moreover, any conclusion of these matters in a manner adverse to the Company and for which it incurs substantial costs or damages not covered by our directors’ and officers’ liability insurance would have a material adverse effect on the Company’s financial condition and business. In addition, the proceedings could adversely impact the Company’s reputation and divert management’s attention and resources from other priorities, including the execution of business plans and strategies that are important to the Company’s ability to grow the Company’s business, any of which could have a material adverse effect on the Company’s business.

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Policies

Use of Estimates

Fair Value Measurements

●

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

●

The carrying value of the Company’s variable interest rate notes payable (Note 8) are recorded at amortized costs, which approximates fair value due to their short-term nature.

Revenue Recognition

The Company’s limited right of return allows for eligible returns of DEXTENZA in the following circumstances:

●

Shipment errors that were the result of an error by the Company;

●

Quantity delivered that is greater or less than the quantity ordered;

●

Product distributed by the Company that is damaged in transit prior to receipt by the customer;

●

Product from physicians, clinics, medical centers and hospitals that was not administered to the patient that is rendered non-usable due to spoilage or mishandling;

●

Product subject to a recall; and

●

Product that the Company, at its sole discretion, has specified to be returned.

reduction of product revenue and the establishment of a current liability which is included as accrued expenses and other current liabilities on the consolidated balance sheets.

Concentration of Credit Risk and of Significant Suppliers and Customers

Inventory

The Company values its inventories at the lower of cost or estimated net realizable value.

Inventory consisted of the following:


	June 30,		December 31,
	2020		2019
Raw materials	$	235	$	217
Work-in-process		106		148
Finished goods		726		589
	$	1,067	$	954

Derivative Liability

Restricted Cash

The Company held restricted cash of $1,764 at June 30, 2020 and December 31, 2019, on its consolidated balance sheet.


	June 30,		June 30,		December 31,
	2020		2019		2019
Cash and cash equivalents	$	84,294	$	61,765	$	54,437
Restricted cash		1,764		6,764		1,764
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$	86,058	$	68,529	$	56,201

Net Loss Per Share

Recently Issued and Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value of Financial Assets and Liabilities

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis


	Fair Value Measurements as of
	June 30, 2020 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	82,361	$	—	$	82,361

Liability:
Derivative liability (Note 4)		—		—		32,535		32,535
Total	$	—	$	82,361	$	32,535	$	114,896


	Fair Value Measurements as of
	December 31, 2019 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	45,156	$	—	$	45,156

Liability:
Derivative liability (Note 4)		—		—		12,124		12,124
Total	$	—	$	45,156	$	12,124	$	57,280

Convertible Notes - Other (Details)	Mar. 01, 2019 USD ($) D $ / shares	Jun. 30, 2020 USD ($) $ / shares	Dec. 31, 2019 $ / shares
Senior Convertible Notes
Common stock, par value \| $ / shares		$ 0.0001	$ 0.0001
2026 Convertible Notes
Senior Convertible Notes
Convertible notes issued \| $	$ 37,500,000	$ 37,500,000
Interest rate (as a percent)	6.00%
Effective annual interest rate (as a percent)		14.80%
Common stock, par value \| $ / shares	$ 0.0001
Maximum beneficial ownership percent	19.99%
Conversion rate	153.8462
Principal amount of debt that is used in conversion calculations \| $	$ 1,000
Initial conversion price \| $ / shares	$ 6.50
Debt repurchase price percent	100.00%
Consecutive trading days \| D	20
Percentage of product of conversion rate and daily VWAP	5.00%
Percentage of outstanding principal amount	100.00%
2026 Convertible Notes \| On or after March 1, 2022
Senior Convertible Notes
Debt repurchase price percent	100.00%
Consecutive trading days \| D	30
Minimum percentage of common stock for conversion of debt	130.00%
Consecutive proceeding trading days for conversion of purchase price \| $	20

Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Customer	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020 customer	Jun. 30, 2019 USD ($)	Jun. 30, 2020 customer	Jun. 30, 2019 USD ($)	Dec. 31, 2019 customer
Total revenue
Concentration risk
Number of major customers	3	1	3	1
Total revenue \| Customer one
Concentration risk
Concentration risk	48.00%	40.00%	41.00%	24.00%
Total revenue \| Customer two
Concentration risk
Concentration risk	16.00%		19.00%
Total revenue \| Customer three
Concentration risk
Concentration risk	14.00%		14.00%
Accounts receivable
Concentration risk
Number of major customers			3		3
Accounts receivable \| Customer one
Concentration risk
Concentration risk	48.00%		48.00%		39.00%
Accounts receivable \| Customer two
Concentration risk
Concentration risk	21.00%		21.00%		18.00%
Accounts receivable \| Customer three
Concentration risk
Concentration risk	16.00%		16.00%		11.00%

Derivative Liability - Other (Details) - 2026 Convertible Notes	Jun. 30, 2020
Conversion price
Derivative Liability
Debt instrument, measurement input	8.33
Expected annual volatility
Derivative Liability
Debt instrument, measurement input	1
Discount yield
Derivative Liability
Debt instrument, measurement input	0.140

Collaboration Agreements - Additional Information (Details) - Collaboration Agreement - Regeneron $ in Thousands	Oct. 10, 2016 USD ($)
Collaboration Agreement
Payment receivable upon exercise of option	$ 10,000
Maximum
Collaboration Agreement
Reimbursable clinical development costs	25,000
Potential increase in reimbursable clinical development costs	5,000
Potential payment receivable per Licensed Product upon the achievement of specified development and regulatory milestones	145,000
Potential payment receivable per Licensed Product upon first commercial sale of such Licensed Product	100,000
Potential payment receivable due for achievement of specified sales milestones for all Licensed Products	$ 50,000

Notes Payable - Schedule of Annual Repayment Requirements for Credit Facility (Details) - Credit Agreement $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)
Annual repayment requirements
Credit Facility, Principal	$ 25,000
Credit Facility, Interest and Final Payment	5,931
Credit Facility, Total	30,931
2020 (July 1 through December 31)
Annual repayment requirements
Credit Facility, Interest and Final Payment	1,247
Credit Facility, Total	1,247
2021
Annual repayment requirements
Credit Facility, Principal	8,333
Credit Facility, Interest and Final Payment	2,094
Credit Facility, Total	10,427
2022
Annual repayment requirements
Credit Facility, Principal	8,333
Credit Facility, Interest and Final Payment	1,270
Credit Facility, Total	9,603
2023
Annual repayment requirements
Credit Facility, Principal	8,334
Credit Facility, Interest and Final Payment	1,320
Credit Facility, Total	$ 9,654

Notes Payable - Other (Details) - USD ($) $ in Thousands		6 Months Ended
Notes Payable - Other (Details) - USD ($) $ in Thousands	Apr. 23, 2020	Jun. 30, 2020	Jun. 30, 2019
Notes Payable
PPP loan proceeds	$ 3,201	$ 3,201
Repayment of PPP loan		3,201
Credit Agreement
Notes Payable
Interest paid		$ 1,176	$ 1,227

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
Consolidated Balance Sheets
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	62,953,793	50,333,559
Common stock, shares outstanding	62,953,793	50,333,559

Summary of Significant Accounting Policies - Fair Value Measurements and Derivative Liability (Details) - 2026 Convertible Notes - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 01, 2019
Summary of Significant Accounting Policies
Convertible notes issued	$ 37,500	$ 37,500
Convertible notes at amortized cost	26,352
Estimated fair value	$ 58,222

Summary of Significant Accounting Policies - Inventory Valuation (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Inventory
Raw materials	$ 235	$ 217
Work-in-process	106	148
Finished goods	726	589
Total inventory	$ 1,067	$ 954

Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Reconciliation of the cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same amounts shown in the statement of cash flows:
Cash and cash equivalents	$ 84,294	$ 54,437	$ 61,765
Restricted cash	1,764	1,764	6,764
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$ 86,058	$ 56,201	$ 68,529	$ 60,676

Fair Value of Financial Assets and Liabilities - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Liability:
Derivative liability	$ 32,535	$ 12,124
Recurring Basis
Liability:
Derivative liability	32,535	12,124
Total	114,896	57,280
Money Market Funds \| Recurring Basis
Assets:
Cash equivalents	82,361	45,156
Level 2 \| Recurring Basis
Liability:
Total	82,361	45,156
Level 2 \| Money Market Funds \| Recurring Basis
Assets:
Cash equivalents	82,361	45,156
Level 3 \| Recurring Basis
Liability:
Derivative liability	32,535	12,124
Total	$ 32,535	$ 12,124

Derivative Liability - Roll forward (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)
Roll forward of the derivative liability
Balance at beginning of period	$ 12,124
Change in fair value	20,411
Balance at end of period	$ 32,535

Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Income Taxes
Unrecognized tax benefits	$ 0	$ 0
Accrued interest or tax penalties related to income taxes	$ 0	$ 0

Notes Payable - Additional Information (Details) - Credit Agreement $ in Thousands	1 Months Ended	6 Months Ended
	Dec. 31, 2018 USD ($) installment	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
Notes Payable
Borrowing capacity under the agreement		$ 25,000
Borrowings outstanding	$ 25,000	25,000	$ 25,000
Repayments of debt, Principal		25,000
Number of equal monthly installments \| installment	36
Final payment due (as a percent)	3.50%
Additional final payment	$ 875	875
2021
Notes Payable
Repayments of debt, Principal		$ 8,333
Required monthly principal payment	694
Achievement of certain milestones
Notes Payable
Repayments of debt, Principal	$ 1,042
Number of equal monthly installments \| installment	24
LIBOR
Notes Payable
Borrowings outstanding	$ 25,000
Effective annual interest rate (as a percent)	9.76%
Interest rate floor (as a percent)	2.00%
Basis spread (as a percent)	7.25%

Notes Payable - Borrowings Outstanding (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Notes Payable
Less: current portion	$ (4,146)
Long-term notes payable	20,970	$ 25,007
Credit Agreement
Notes Payable
Borrowings outstanding	25,000	25,000	$ 25,000
Accrued exit fee	267	180
Less: unamortized discount	151	173
Borrowings	25,116	25,007
Less: current portion	(4,146)
Long-term notes payable	$ 20,970	$ 25,007

Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended				6 Months Ended		15 Months Ended
	Apr. 05, 2019	May 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020
Common Stock
Net proceeds from issuance of common stock		$ 48,327					$ 63,025	$ 10,068
Common Stock
Common Stock
Number of shares issued			9,735,649	2,657,823	1,180,367	1,318,481
Common Stock \| Follow-on Offering
Common Stock
Common stock, price per share		$ 5.50
Number of shares issued		8,181,819
Common Stock \| Over-allotment Option
Common Stock
Common stock, price per share		$ 5.17
Number of shares issued		1,227,272
Common Stock \| 2019 Sales Agreement
Common Stock
Maximum aggregate proceeds from offering	$ 50,000
Number of shares issued			326,558				2,984,381		10,321,840
Net proceeds from issuance of common stock			$ 1,667				$ 14,357		$ 46,983

Net Loss Per Share - Schedule of Antidilutive Securities, Excluded from Computation of Diluted Net Loss per Share (Details) - shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	9,289,112	7,626,281
Options to Purchase Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	9,270,173	7,607,342
Warrant \| Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	18,939	18,939

Stock-Based Awards - Inducement Stock Option Awards (Detail) - Inducement Plan	Jun. 30, 2020 shares
Stock-Based Awards
Number of shares of common stock authorized for issuance	500,000
Number of shares of common stock available for issuance	446,000

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands		6 Months Ended
	Oct. 10, 2016	Jun. 30, 2020
Regeneron \| Collaboration Agreement \| Maximum
Commitments and Contingencies
Reimbursable clinical development costs	$ 25,000
Potential increase in reimbursable clinical development costs	$ 5,000
Incept
Commitments and Contingencies
Royalties paid related to product sales		$ 434