0001558370-22-007812 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2022	May 06, 2022
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
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	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		76,759,614
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001393434
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 145,417	$ 164,164
Accounts receivable, net	23,207	21,135
Inventory	1,358	1,250
Prepaid expenses and other current assets	4,670	4,751
Total current assets	174,652	191,300
Property and equipment, net	6,614	6,956
Restricted cash	1,764	1,764
Operating lease assets	4,592	4,867
Total assets	187,622	204,887
Current liabilities:
Accounts payable	3,420	4,592
Accrued expenses and other current liabilities	17,636	20,121
Deferred revenue	1,208
Operating lease liabilities	1,696	1,624
Total current liabilities	23,960	26,337
Other liabilities:
Operating lease liabilities, net of current portion	5,472	5,924
Derivative liability	13,234	20,192
Deferred revenue, net of current portion	13,103	13,000
Notes payable, net of discount	25,063	25,000
2026 convertible notes, net	26,995	26,435
Total liabilities	107,827	116,888
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized and no shares issued or outstanding at December 31, 2021 and December 31, 2020, respectively
Common stock, $0.0001 par value; 200,000,000 and 100,000,000 shares authorized and 76,731,940 and 75,996,732 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively	8	8
Additional paid-in capital	638,133	633,795
Accumulated deficit	(558,346)	(545,804)
Total stockholders' equity	79,795	87,999
Total liabilities and stockholders' equity	$ 187,622	$ 204,887

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
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	200,000,000	200,000,000
Common stock, shares issued	76,759,614	76,731,940
Common stock, shares outstanding	76,759,614	76,731,940

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenue:
Total revenue, net	$ 13,187	$ 7,342
Costs and operating expenses:
Cost, Product and Service [Extensible List]	Product	Product
Cost of product revenue	$ 1,300	$ 892
Research and development	13,100	10,927
Selling and marketing	9,063	8,086
General and administrative	7,557	7,665
Total costs and operating expenses	31,020	27,570
Loss from operations	(17,833)	(20,228)
Other income (expense):
Interest income	18	12
Interest expense	(1,683)	(1,679)
Change in fair value of derivative liability	6,958	25,016
Other income (expense), net	(2)
Total other income (expense), net	5,291	23,349
Net loss and comprehensive loss	$ (12,542)	$ 3,121
Net loss per share, basic	$ (0.16)	$ 0.04
Weighted average common shares outstanding, basic	76,745,663	76,071,017
Net loss per share, diluted	$ (0.22)	$ (0.24)
Weighted average common shares outstanding, diluted	82,514,895	87,245,706
Product
Revenue:
Total revenue, net	$ 12,498	$ 7,342
Collaboration revenue
Revenue:
Total revenue, net	$ 689

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2020	$ 8	$ 615,338	$ (539,251)	$ 76,095
Balance, shares at Dec. 31, 2020	75,996,732
Stockholders' Equity (Deficit)
Issuance of common stock upon exercise of stock options		1,197		1,197
Issuance of common stock upon exercise of stock options, shares	228,241
Issuance of common stock upon cashless exercise of warrant, shares	11,737
Issuance costs associated with common stock public offering		(91)		(91)
Stock-based compensation expense		3,086		3,086
Net loss			3,121	3,121
Balance at Mar. 31, 2021	$ 8	619,530	(536,130)	83,408
Balance, shares at Mar. 31, 2021	76,236,710
Balance at Dec. 31, 2021	$ 8	633,795	(545,804)	87,999
Balance, shares at Dec. 31, 2021	76,731,940
Stockholders' Equity (Deficit)
Issuance of common stock upon exercise of stock options		129		129
Issuance of common stock upon exercise of stock options, shares	27,674
Stock-based compensation expense		4,209		4,209
Net loss			(12,542)	(12,542)
Balance at Mar. 31, 2022	$ 8	$ 638,133	$ (558,346)	$ 79,795
Balance, shares at Mar. 31, 2022	76,759,614

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net loss	$ (12,542)	$ 3,121
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation expense	4,209	3,086
Non-cash interest expense	1,186	1,132
Change in fair value of derivative liability	(6,958)	(25,016)
Depreciation and amortization expense	557	646
Gain on disposal of property and equipment	2
Changes in operating assets and liabilities:
Accounts receivable	(2,072)	(1,379)
Prepaid expenses and other current assets	81	650
Inventory	(108)	78
Operating lease assets	275	227
Accounts payable	(1,113)	1,523
Accrued expenses	(3,048)	(1,111)
Deferred revenue	1,311
Operating lease liabilities	(380)	(316)
Net cash used in operating activities	(18,600)	(17,359)
Cash flows from investing activities:
Purchases of property and equipment	(276)	(158)
Net cash used in investing activities	(276)	(158)
Cash flows from financing activities:
Proceeds from exercise of stock options	129	1,197
Issuance costs from the issuance of common stock upon public offering		(275)
Repayment of notes payable		(2,083)
Net cash provided by financing activities	129	(1,162)
Net (decrease) increase in cash, cash equivalents and restricted cash	(18,747)	(18,679)
Cash, cash equivalents and restricted cash at beginning of period	165,928	229,821
Cash, cash equivalents and restricted cash at end of period	147,181	211,142
Supplemental disclosure of cash flow information:
Cash paid for interest	495	593
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment included in accounts payable and accrued expenses at balance sheet dates	$ 123	$ 10

Nature of the Business and Basis of Presentation

3 Months Ended

Mar. 31, 2022

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 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 product candidates, undertaking preclinical studies and clinical trials, manufacturing its products and product candidates, building its sales and marketing infrastructure for the commercialization of the Company’s approved products and product candidates, and commercializing its approved products.

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 March 31, 2022, the Company had two U.S. Food and Drug Administration (“FDA”)-approved products in commercialization in the United States: DEXTENZA^® (dexamethasone insert) 0.4mg, an intracanalicular insert for the treatment of post-surgical ocular inflammation and pain and ocular itching associated with allergic conjunctivitis and ReSure^® Sealant, an ophthalmic device designed to prevent wound leaks in corneal incisions following cataract surgery. While ReSure Sealant is commercially available in the United States, it does not receive sales support, is not currently being manufactured by the Company, and has not in the past generated, nor is it anticipated to in the future to generate, material revenues. The Company’s most advanced product candidates are in either Phase 1 or Phase 2 of 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.

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 March 31, 2022, the Company had an accumulated deficit of $558,346. The Company believes that its existing cash and cash equivalents of $145,417, as of March 31, 2022, along with its current operating plan, which includes anticipated revenues from the sale of DEXTENZA, will enable it to fund its planned operating expenses, debt service obligations and capital expenditure requirements through at least the next 12 months from the date of these condensed consolidated financial statements. The future viability of the Company beyond that point is dependent on its ability to generate cash flows from the sale of DEXTENZA and raise additional capital to finance its operations. The Company will need to finance its operations through public or private securities offerings, debt financings, royalty financings or other sources, which may include licensing, collaborations or other strategic transactions or arrangements. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs for product candidates,

product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

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, 2021 was derived from audited financial statements but does not include all disclosures required by GAAP. The accompanying unaudited financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 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, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 28, 2022. 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 March 31, 2022 and results of operations and cash flows for the three months ended March 31, 2022 and 2021 have been made. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022.

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

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 condensed 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, clinical trial accruals and the fair value of derivatives. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results may differ from these estimates.

Concentration of Credit Risk and of Significant Suppliers and Customers

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

For the three months ended March 31, 2022, three specialty distributor customers accounted for 42%, 25%, and 23% of the Company’s total product revenue, and no other customer accounted for more than 10% of the Company’s total product revenue. At March 31, 2022, three specialty distributor customers accounted for 42%, 25% and 22% of the Company’s total accounts receivable and no other customer accounted for more than 10% of the Company’s total accounts receivable at March 31, 2022.

For the three months ended March 31, 2021, three specialty distributor customers accounted for 45%, 21%, and 12% of the Company’s total product revenue, and no other customer accounted for more than 10% of the Company’s total product revenue. At March 31, 2021, three specialty distributor customers accounted for 49%, 25% and 14% of the Company’s total accounts receivable and no other customer accounted for more than 10% of the Company’s total accounts receivable at March 31, 2021.

Recently Adopted Accounting Pronouncements

Effective January 1, 2022, the Company adopted ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share guidance for both Subtopics. The adoption of this standard did not have any impact on the Company’s condensed consolidated financial statements.

Fair Value of Financial Assets and Liabilities

3 Months Ended

Mar. 31, 2022

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 March 31, 2022 and December 31, 2021 and indicate the level of the fair value hierarchy utilized to determine such fair value:


	Fair Value Measurements as of
	March 31, 2022 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	46,394	$	—	$	—	$	46,394

Liability:
Derivative liability (Note 7)	$	—	$	—	$	13,234	$	13,234


	Fair Value Measurements as of
	December 31, 2021 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	62,392	$	—	$	—	$	62,392

Liability:
Derivative liability (Note 7)	$	—	$	—	$	20,192	$	20,192

- 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

Restricted Cash

3 Months Ended

Mar. 31, 2022

Restricted Cash

Restricted Cash

4. Restricted Cash

The Company held restricted cash of $1,764 at March 31, 2022 and December 31, 2021, on its condensed consolidated balance sheet. The Company held restricted cash as security deposits for the lease of its manufacturing space and corporate headquarters.

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


	March 31,		March 31,
	2022		2021
Cash and cash equivalents	$	145,417	$	209,378
Restricted cash		1,764		1,764
Total cash, cash equivalents and restricted cash	$	147,181	$	211,142

Inventory

3 Months Ended

Mar. 31, 2022

Inventory

Inventory

5. Inventory

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

Inventory consisted of the following:


	March 31,		December 31,
	2022		2021
Raw materials	$	332	$	388
Work-in-process		567		605
Finished goods		459		257
	$	1,358	$	1,250

Accrued Expenses

3 Months Ended

Mar. 31, 2022

Accrued Expenses

Accrued Expenses

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of March 31, 2022 and December 31, 2021 consisted of the following:


	March 31,		December 31,
	2022		2021
Accrued payroll and related expenses	$	3,520	$	6,597
Accrued rebates and programs		3,344		3,615
Accrued professional fees		1,547		1,227
Accrued research and development expenses		1,085		1,102
Accrued interest payable on 2026 convertible notes		7,038		6,475
Accrued other		1,102		1,105
	$	17,636	$	20,121

Derivative Liability

3 Months Ended

Mar. 31, 2022

Derivative Liability

Derivative Liability

7. Derivative Liability

The unsecured senior subordinated convertible notes (the “2026 Convertible Notes”) (Note 8) contained an embedded conversion option that met the criteria to be bifurcated and accounted for separately (the “Derivative Liability”) from the 2026 Convertible Notes. The Derivative Liability was recorded at fair value upon the issuance of the 2026 Convertible Notes and is subsequently remeasured to fair value at each reporting period. The Derivative Liability was initially valued and remeasured using a “with-and-without” method. The “with-and-without” methodology involves valuing the whole instrument on an as-is basis and then valuing the instrument without the embedded conversion option. The difference between the entire instrument with the embedded conversion option compared to the instrument without the embedded conversion option is the fair value of the derivative, recorded as the Derivative Liability in the Company’s condensed consolidated balance sheet.

The estimated fair value of the 2026 Convertible Notes was $45,160 at March 31, 2022. 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 inputs when determining the fair value for disclosure purposes are the common stock price and bond yield which are 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. The main inputs to valuing the 2026 Convertible Notes with the conversion option are as follows:


		As of
	March 31,			December 31,
	2022			2021
Company's stock price	$	4.95		$	6.97
Expected annual volatility		83.5	%		82.6	%
Bond yield		14.0	%		12.6	%

A roll-forward of the derivative liability is as follows:


	As of
	March 31, 2022
Balance at December 31, 2021	$	20,192
Change in fair value		(6,958)
Balance at March 31, 2022	$	13,234

Convertible Notes

3 Months Ended

Mar. 31, 2022

Convertible Notes

Convertible Notes

8. 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 presents accrued interest in accrued current liabilities because the 2026 Convertible Notes are currently convertible and the interest is payable in cash. The effective annual interest rate for the 2026 Convertible Notes was 14.8% through March 31, 2022.

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) 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 7, 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.

The terms and conditions of the 2026 Convertible Notes are described in the Company’s periodic reports including its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022.

A summary of the 2026 Convertible Notes at March 31, 2022 and December 31, 2021 is as follows:


	March 31,		December 31,
	2022		2021
2026 Convertible Notes	$	37,500	$	37,500
Less: unamortized discount		(10,505)		(11,065)
Total	$	26,995	$	26,435

Accrued interest related to the 2026 Convertible Notes amounted to $7,038 and $6,475 at March 31, 2022 and December 31, 2021, respectively.

Income Taxes

3 Months Ended

Mar. 31, 2022

Income Taxes

Income Taxes

9. Income Taxes

The Company did not provide for any income taxes in its condensed consolidated statement of operations and comprehensive income (loss) for the three month periods ended March 31, 2022 or 2021. While the Company had net income for the three months ended March 31, 2021, the Company was projecting book and tax losses for the full year ended 2021, for which it was more likely than not that the Company would not realize a benefit for, as the Company had recorded a full valuation allowance against its deferred tax assets. Thus, the Company did not record any income taxes for the three months ended March 31, 2021. The Company has provided a valuation allowance for the full amount of its net deferred tax assets because, at March 31, 2022 and December 31, 2021, it was more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Collaboration Agreements

3 Months Ended

Mar. 31, 2022

Collaboration Agreements

Collaboration Agreements

10. Collaboration Agreements

AffaMed License Agreement

In October 2020, the Company entered into license agreement with AffaMed Therapeutics Limited (“AffaMed”) for the development and commercialization of the Company’s DEXTENZA product regarding ocular inflammation and pain following cataract surgery and ocular itching associated with allergic conjunctivitis and for the Company’s OTX-TIC product candidate (collectively with DEXTENZA, the “AffaMed Licensed Products”) regarding open-angle glaucoma or ocular hypertension, in each case in mainland China, Taiwan, Hong Kong, Macau, South Korea, and the countries of the Association of Southeast Asian Nations. The Company and AffaMed subsequently amended the license agreement in October 2021 (as amended, the “License Agreement”). The Company retains development and commercialization rights for the AffaMed Licensed Products in the rest of the world.

The terms and conditions of the License Agreement are described in the Company’s periodic reports including its Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 28, 2022.

The Company recognized $689 of collaboration revenue related to the performance obligation to conduct a Phase 2 clinical trial of OTX-TIC under the License Agreement for the three months ended March 31, 2022. During the three months ended March 31, 2022, the Company invoiced AffaMed $2,000 for a clinical trial support payment, under the

License agreement, in connection with the initiation of the OTX-TIC Phase 2 clinical trial. The Company concluded this clinical support payment was no longer constrained and has allocated the amount to the performance obligation to conduct a Phase 2 clinical trial of OTX-TIC. As of March 31, 2022, the aggregate amount of the transaction price allocated to performance obligations that are partially unsatisfied was $1,311. This amount is expected to be recognized as performance obligations are satisfied through June 2023.

For the Phase 2 clinical trial of OTX-TIC, performance obligation revenue is recognized under an input method using the ratio of effort incurred to date compared to the total estimated effort required to complete the performance obligation. The calculation of the total estimated effort includes the total amount of forecasted costs associated with the completion of the Phase 2 clinical trial, as well as the assumed timing of this activity. Such cost estimates include forecasted direct labor and material costs, subcontractor costs, and external contract research organization, or CRO, costs.

Total deferred revenue at March 31, 2022 were as follows:



	Deferred Revenue
Deferred revenue at December 31, 2021	$	13,000
Additions		2,000
Amounts recognized into revenue		(689)
Deferred revenue at March 31, 2022	$	14,311

As of March 31, 2022, the aggregate amount of the transaction price allocated to DEXTENZA product and OTX-TIC product performance obligations that are partially unsatisfied was $13,000. This amount is expected to be recognized as performance obligations are satisfied. The Company recognizes revenue related to the amounts allocated to the combined performance obligations for the development and commercialization of the Company’s DEXTENZA product regarding ocular inflammation and pain following cataract surgery and allergic conjunctivitis and the Company’s OTX-TIC product candidate based on the point in time upon which control of supply is transferred to AffaMed for each delivery of the associated supply. The Company currently expects to recognize the revenue over a period of approximately seven to eight years commencing on the date the Company begins delivering product to AffaMed. This estimate of this period considers the timing of development and commercial activities under the License Agreement and may be reduced or increased based on the various activities as directed by the joint committees, decisions made by AffaMed, regulatory feedback or other factors not currently known.

Notes Payable

3 Months Ended

Mar. 31, 2022

Notes Payable

Notes Payable

11. 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”). Under the Credit Facility, the Company has a total borrowing capacity of $25,000, which was fully drawn down as of March 31, 2022. The carrying value of the Company’s variable interest rate notes payable are recorded at amortized cost, which approximates fair value due to their short-term nature.

The terms and conditions of the Credit Agreement and the Credit Facility are described in the Company’s periodic reports including its Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 28, 2022.

Borrowings outstanding are as follows:


	March 31,		December 31,
	2022		2021
Borrowings outstanding	$	25,000	$	25,000
Accrued exit fee		165		110
Unamortized discount		(102)		(110)
Long-term notes payable	$	25,063	$	25,000

As of March 31, 2022, the annual repayment requirements for the Credit Facility, inclusive of the final payment of $875 due at expiration, were as follows:




Year Ending December 31,	Principal		Final Payment		Total
2022 (April 1 to December 31)		—		—		—
2023		—		—		—
2024		8,333		—		8,333
2025		16,667		875		17,542
	$	25,000	$	875	$	25,875

Net (Loss) Income Per Share

3 Months Ended

Mar. 31, 2022

Net (Loss) Income Per Share

Net (Loss) Income Per Share

12. Net (Loss) Income Per Share

Basic net (loss) income per share was calculated as follows for the three months ended March 31, 2022 and 2021.


	Three Months Ended March 31,
	2022			2021
Numerator:
Net (loss) income attributable to common stockholders	$	(12,542)	$	3,121
Denominator:
Weighted average common shares outstanding, basic		76,745,663		76,071,017
Net (loss) income per share - basic	$	(0.16)	$	0.04

Diluted net loss per share was calculated as follows for the three months ended March 31, 2022 and 2021:


		Three Months Ended March 31,
	2022			2021
Net (loss) income attributable to common stockholders, basic	$	(12,542)	$	3,121
Interest expense on 2026 Convertible Notes		1,123		1,078
Change in fair value of derivative liability		(6,958)		(25,016)
Net loss attributable to common stockholders, diluted	$	(18,377)	$	(20,817)

Weighted average common shares outstanding, basic		76,745,663		76,071,017
Dilutive options (treasury stock method)		—		5,405,457
Shares issuable upon conversion of 2026 Convertible Notes, as if converted		5,769,232		5,769,232
Weighted average common shares outstanding, diluted		82,514,895		87,245,706


Net loss per share attributable to common stockholders, diluted	$	(0.22)	$	(0.24)

The Company excluded the following common stock equivalents and restricted stock units, outstanding as of March 31, 2022 and 2021, from the computation of diluted net loss per share for the three months ended March 31, 2022 and 2021 because they had an anti-dilutive impact.


	Three Months Ended March 31,
	2022	2021
Options to purchase common stock	13,618,221	2,999,716
Restricted stock units	926,063	—
	14,544,284	2,999,716

Stock-Based Awards

3 Months Ended

Mar. 31, 2022

Stock-Based Awards

Stock-Based Awards

13. Stock-Based Awards

2021 Stock Incentive Plan

The 2021 Stock Incentive Plan (the “2021 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 2021 Plan is 6,000,000 shares of common stock; plus up to the sum of 456,334 shares remaining available for grant under the 2014 Stock Incentive Plan (the “2014 Plan”) as of immediately prior to the effective date of the 2021 Plan and 9,766,336 shares subject to awards granted under the 2014 Plan or the Company’s 2006 Stock Incentive Plan (the “2006 Plan”), which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject to certain limitations). As of March 31, 2022, 2,622,985 shares remained available for issuance under the 2021 Plan.

Stock Option Awards for the Three Months Ended March 31, 2022

During the three months ended March 31, 2022, the Company granted options to purchase 2,862,203 shares of common stock, at a weighted exercise price of $5.28 per share under the 2021 Plan.

Restricted Stock Units (RSU) Awards for the Three Months Ended March 31, 2022

During the three months ended March 31, 2022, the Company granted 934,479 restricted stock units (“RSUs”) under the 2021 Plan. Each RSU is equivalent to one share of common stock upon vesting. Each RSU award vests on an annual basis over a three-year period. Holders of RSUs are not entitled to vote on any matters and are not entitled to dividends. The Company has determined the fair value of each RSU based on the fair value of the Company’s common stock on the date of grant and recognizes the compensation expense using the straight-line method over the service period, which coincides with the vesting period.

Stock-based Compensation Expense

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


	Three Months Ended
	March 31,
	2022		2021
Research and development	$	1,062	$	677
Selling and marketing		1,138		755
General and administrative		2,009		1,654
	$	4,209	$	3,086

As of March 31, 2022, the Company had an aggregate of $28,432 of unrecognized stock-based compensation cost, which is expected to be recognized over a weighted average period of 3.0 years.

Related Party Transactions

3 Months Ended

Mar. 31, 2022

Related Party Transactions

Related Party Transactions

14. Related Party Transactions

In November 2020, the Company engaged Specialty Pharma Consulting, LLC (“Specialty Pharma”), an entity affiliated with Kevin Coughenour, to provide services for quality engineering and validation activities in the ordinary course of business. Mr. Coughenour is married to the Company’s former Chief Operating Officer Patricia Kitchen. The Company incurred fees for quality engineering and validation activities rendered by Specialty Pharma of $0 and $126, for the three months ended March 31, 2022 and 2021, respectively. As of each of March 31, 2022 and December 31, 2021, there was $0 recorded in accounts payable and $0 recorded in accrued expenses for Specialty Pharma. On April 26, 2021, the Company and Specialty Pharma terminated their relationship.

The Company has engaged Wilmer Cutler Pickering Hale and Dorr LLP (“WilmerHale”) to provide certain legal services to the Company. The Company's Chief Business Officer’s sister is a managing partner at WilmerHale, who has not participated in providing legal services to the Company. The Company incurred fees for legal services rendered by WilmerHale of approximately $327 and $340 for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022 and December 31, 2021, there was $0 and $119 recorded in accounts payable for WilmerHale. As of March 31, 2022 and December 31, 2021, there was $327 and $68 recorded in accrued expenses for WilmerHale.

Common Stock

3 Months Ended

Mar. 31, 2022

Common Stock.

Common Stock

15. Common Stock

On August 9, 2021, the Company and Jefferies LLC (“Jefferies”) mutually terminated an Open Market Sale Agreement (the “2019 Sales Agreement”) and entered into another Open Market Sale Agreement (the “2021 Sales Agreement”) under which the Company may offer and sell shares of common stock of the Company having an aggregate offering price of up to $100,000 from time to time through Jefferies, acting as agent. As of May 6, 2022, the Company has not sold any shares of common stock under the 2021 Sales Agreement.

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2022
Summary of Significant Accounting Policies
Use of Estimates	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 condensed 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, clinical trial accruals and the fair value of derivatives. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results may differ from these estimates.
Concentration of Credit Risk and of Significant Suppliers and Customers	Concentration of Credit Risk and of Significant Suppliers and Customers The Company is dependent on a small number of third-party manufacturers to supply products for research and development activities in its preclinical and clinical programs and for sales of its products. The Company’s development programs as well as revenue from future product sales could be adversely affected by a significant interruption in the supply of any of the components of these products. For the three months ended March 31, 2022, three specialty distributor customers accounted for 42%, 25%, and 23% of the Company’s total product revenue, and no other customer accounted for more than 10% of the Company’s total product revenue. At March 31, 2022, three specialty distributor customers accounted for 42%, 25% and 22% of the Company’s total accounts receivable and no other customer accounted for more than 10% of the Company’s total accounts receivable at March 31, 2022. For the three months ended March 31, 2021, three specialty distributor customers accounted for 45%, 21%, and 12% of the Company’s total product revenue, and no other customer accounted for more than 10% of the Company’s total product revenue. At March 31, 2021, three specialty distributor customers accounted for 49%, 25% and 14% of the Company’s total accounts receivable and no other customer accounted for more than 10% of the Company’s total accounts receivable at March 31, 2021.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements Effective January 1, 2022, the Company adopted ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share guidance for both Subtopics. The adoption of this standard did not have any impact on the Company’s condensed consolidated financial statements.

Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value of Financial Assets and Liabilities

Schedule of assets and liabilities measured at fair Value on recurring basis


	Fair Value Measurements as of
	March 31, 2022 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	46,394	$	—	$	—	$	46,394

Liability:
Derivative liability (Note 7)	$	—	$	—	$	13,234	$	13,234


	Fair Value Measurements as of
	December 31, 2021 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	62,392	$	—	$	—	$	62,392

Liability:
Derivative liability (Note 7)	$	—	$	—	$	20,192	$	20,192

Restricted Cash (Tables)

3 Months Ended

Mar. 31, 2022

Restricted Cash

Reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheet to the total amounts shown in the statement of cash flows


	March 31,		March 31,
	2022		2021
Cash and cash equivalents	$	145,417	$	209,378
Restricted cash		1,764		1,764
Total cash, cash equivalents and restricted cash	$	147,181	$	211,142

Inventory (Tables)

3 Months Ended

Mar. 31, 2022

Inventory

Components of inventory


	March 31,		December 31,
	2022		2021
Raw materials	$	332	$	388
Work-in-process		567		605
Finished goods		459		257
	$	1,358	$	1,250

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2022

Accrued Expenses

Schedule of accrued expenses


	March 31,		December 31,
	2022		2021
Accrued payroll and related expenses	$	3,520	$	6,597
Accrued rebates and programs		3,344		3,615
Accrued professional fees		1,547		1,227
Accrued research and development expenses		1,085		1,102
Accrued interest payable on 2026 convertible notes		7,038		6,475
Accrued other		1,102		1,105
	$	17,636	$	20,121

Derivative Liability (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Liability

Schedule of main inputs to valuing the 2026 Convertible Notes with the conversion option


		As of
	March 31,			December 31,
	2022			2021
Company's stock price	$	4.95		$	6.97
Expected annual volatility		83.5	%		82.6	%
Bond yield		14.0	%		12.6	%

Summary of roll-forward of the derivative liability


	As of
	March 31, 2022
Balance at December 31, 2021	$	20,192
Change in fair value		(6,958)
Balance at March 31, 2022	$	13,234

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
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+ Details

Convertible Notes (Tables)

3 Months Ended

Mar. 31, 2022

Convertible Notes

Summary of the 2026 Convertible Notes

A summary of the 2026 Convertible Notes at March 31, 2022 and December 31, 2021 is as follows:


	March 31,		December 31,
	2022		2021
2026 Convertible Notes	$	37,500	$	37,500
Less: unamortized discount		(10,505)		(11,065)
Total	$	26,995	$	26,435

Collaboration Agreements (Tables)

3 Months Ended

Mar. 31, 2022

Collaboration Agreements

Schedule of deferred revenue



	Deferred Revenue
Deferred revenue at December 31, 2021	$	13,000
Additions		2,000
Amounts recognized into revenue		(689)
Deferred revenue at March 31, 2022	$	14,311

Notes Payable (Tables)

3 Months Ended

Mar. 31, 2022

Notes Payable

Schedule of borrowings outstanding


	March 31,		December 31,
	2022		2021
Borrowings outstanding	$	25,000	$	25,000
Accrued exit fee		165		110
Unamortized discount		(102)		(110)
Long-term notes payable	$	25,063	$	25,000

Schedule of Annual Repayment Requirements for Credit Facility




Year Ending December 31,	Principal		Final Payment		Total
2022 (April 1 to December 31)		—		—		—
2023		—		—		—
2024		8,333		—		8,333
2025		16,667		875		17,542
	$	25,000	$	875	$	25,875

Net (Loss) Income Per Share (Tables)

3 Months Ended

Mar. 31, 2022

Net (Loss) Income Per Share

Schedule of basic and diluted net (loss) income per share attributable to common stockholders

Basic net (loss) income per share was calculated as follows for the three months ended March 31, 2022 and 2021.


	Three Months Ended March 31,
	2022			2021
Numerator:
Net (loss) income attributable to common stockholders	$	(12,542)	$	3,121
Denominator:
Weighted average common shares outstanding, basic		76,745,663		76,071,017
Net (loss) income per share - basic	$	(0.16)	$	0.04

Diluted net loss per share was calculated as follows for the three months ended March 31, 2022 and 2021:


		Three Months Ended March 31,
	2022			2021
Net (loss) income attributable to common stockholders, basic	$	(12,542)	$	3,121
Interest expense on 2026 Convertible Notes		1,123		1,078
Change in fair value of derivative liability		(6,958)		(25,016)
Net loss attributable to common stockholders, diluted	$	(18,377)	$	(20,817)

Weighted average common shares outstanding, basic		76,745,663		76,071,017
Dilutive options (treasury stock method)		—		5,405,457
Shares issuable upon conversion of 2026 Convertible Notes, as if converted		5,769,232		5,769,232
Weighted average common shares outstanding, diluted		82,514,895		87,245,706


Net loss per share attributable to common stockholders, diluted	$	(0.22)	$	(0.24)

Schedule of antidilutive securities, excluded from computation of diluted net loss per share


	Three Months Ended March 31,
	2022	2021
Options to purchase common stock	13,618,221	2,999,716
Restricted stock units	926,063	—
	14,544,284	2,999,716

Stock-Based Awards (Tables)

3 Months Ended

Mar. 31, 2022

Stock-Based Awards

Schedule of stock-based compensation expense related to stock options


	Three Months Ended
	March 31,
	2022		2021
Research and development	$	1,062	$	677
Selling and marketing		1,138		755
General and administrative		2,009		1,654
	$	4,209	$	3,086

Nature of the Business and Basis of Presentation - Nature of Business (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
Nature of the Business and Basis of Presentation
Accumulated deficit	$ 558,346	$ 545,804
Cash and cash equivalents	$ 145,417	$ 164,164	$ 209,378

- Definition

The cumulative amount of the reporting entity's undistributed earnings or deficit.

+ References + Details

Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Customer - customer	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Total revenue
Concentration risk
Number of major customers	3	3
Total revenue \| Customer one
Concentration risk
Concentration risk	42.00%	45.00%
Total revenue \| Customer two
Concentration risk
Concentration risk	25.00%	21.00%
Total revenue \| Customer three
Concentration risk
Concentration risk	23.00%	12.00%
Accounts receivable
Concentration risk
Number of major customers	3	3
Accounts receivable \| Customer one
Concentration risk
Concentration risk	42.00%	49.00%
Accounts receivable \| Customer two
Concentration risk
Concentration risk	25.00%	25.00%
Accounts receivable \| Customer three
Concentration risk
Concentration risk	22.00%	14.00%

Fair Value of Financial Assets and Liabilities - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Liability:
Derivative liability	$ 13,234	$ 20,192
Recurring Basis
Liability:
Derivative liability	13,234	20,192
Money Market Funds \| Recurring Basis
Assets:
Cash equivalents	46,394	62,392
Level 1 \| Money Market Funds \| Recurring Basis
Assets:
Cash equivalents	46,394	62,392
Level 3 \| Recurring Basis
Liability:
Derivative liability	$ 13,234	$ 20,192

Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Restricted Cash
Cash and cash equivalents	$ 145,417	$ 164,164	$ 209,378
Restricted cash	1,764	1,764	1,764
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$ 147,181	$ 165,928	$ 211,142	$ 229,821

Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Inventory
Raw materials	$ 332	$ 388
Work-in-process	567	605
Finished goods	459	257
Total inventory	$ 1,358	$ 1,250

Accrued Expenses - Summary (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Accrued Expenses
Accrued payroll and related expenses	$ 3,520	$ 6,597
Accrued rebates and programs	3,344	3,615
Accrued professional fees	1,547	1,227
Accrued research and development expenses	1,085	1,102
Accrued interest payable on 2026 convertible notes	7,038	6,475
Accrued other	1,102	1,105
Total	$ 17,636	$ 20,121

Derivative Liability - Main Inputs to Valuing Convertible Notes with Conversion Option (Details) - 2026 Convertible Notes $ in Thousands	Mar. 31, 2022 USD ($)	Dec. 31, 2021
Derivative Liability
Estimated fair value	$ 45,160
Company's stock price
Derivative Liability
Debt instrument, measurement input	4.95	6.97
Expected annual volatility
Derivative Liability
Debt instrument, measurement input	83.5	82.6
Bond yield
Derivative Liability
Debt instrument, measurement input	14.0	12.6

Derivative Liability - Roll forward (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Roll forward of the derivative liability
Balance at beginning of period	$ 20,192
Change in fair value	(6,958)
Balance at end of period	$ 13,234

Convertible Notes - Other (Details)	Mar. 01, 2019 USD ($) D $ / shares	Mar. 31, 2022 USD ($) $ / shares	Dec. 31, 2021 USD ($) $ / 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	$ 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%
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 \| D	20

Convertible Notes - Summary (Details) - 2026 Convertible Notes - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 01, 2019
Senior Convertible Notes
Convertible notes	$ 37,500	$ 37,500	$ 37,500
Less: unamortized discount	(10,505)	(11,065)
Total	26,995	26,435
Accrued interest	$ 7,038	$ 6,475

Collaboration Agreements - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Collaboration Agreement
Revenue recognized	$ 13,187	$ 7,342
Total deferred revenue:
Deferred revenue, beginning balance	13,000
Additions	2,000
Amounts recognized into revenue	(689)
Deferred revenue, ending balance	14,311
Collaboration revenue
Collaboration Agreement
Revenue recognized	689
License Agreement \| AffaMed
Collaboration Agreement
Transaction price allocated to performance obligations partially unsatisfied	$ 13,000
License Agreement \| AffaMed \| Minimum
Collaboration Agreement
Remaining performance obligation, expected timing of satisfaction, period	7 years
License Agreement \| AffaMed \| Maximum
Collaboration Agreement
Remaining performance obligation, expected timing of satisfaction, period	8 years
License Agreement \| AffaMed \| OTX-TIC Product
Collaboration Agreement
Revenue recognized	$ 689
Amount invoiced for initiation of OTX-TIC program	2,000
Transaction price allocated to performance obligations partially unsatisfied	$ 1,311

Notes Payable - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Credit Facility.
Notes Payable
Borrowing capacity under the agreement	$ 25,000
Borrowings outstanding	25,000	$ 25,000
2021 Amended Credit Facility
Notes Payable
Exit fee, amount	875
Additional final payment	$ 875

Notes Payable - Borrowings Outstanding (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Notes Payable
Long-term notes payable	$ 25,063	$ 25,000
Credit Facility.
Notes Payable
Borrowings outstanding	25,000	25,000
Accrued exit fee	165	110
Unamortized discount	(102)	(110)
Long-term notes payable	$ 25,063	$ 25,000

Notes Payable - Schedule of Annual Repayment Requirements for Credit Facility (Details) - 2021 Amended Credit Facility $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Annual repayment requirements
Credit Facility, Principal	$ 25,000
Credit Facility, Final Payment	875
Total	25,875
2024
Annual repayment requirements
Credit Facility, Principal	8,333
Total	8,333
2025
Annual repayment requirements
Credit Facility, Principal	16,667
Credit Facility, Final Payment	875
Total	$ 17,542

Net (Loss) Income Per Share - Basic (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Basic net loss per share attributable to common stockholders:
Net income (loss) attributable to common stockholders	$ (12,542)	$ 3,121
Weighted average common shares outstanding, basic	76,745,663	76,071,017
Net loss per share, basic	$ (0.16)	$ 0.04

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Net (Loss) Income Per Share - Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Reconciliation of net loss attributable to common stockholders for basic and diluted net loss per share
Net loss attributable to common stockholders, basic	$ (12,542)	$ 3,121
Interest expense on 2026 Convertible Note	1,123	1,078
Change in fair value of derivative liability	(6,958)	(25,016)
Net loss attributable to common stockholders, diluted	$ (18,377)	$ (20,817)
Weighted average common shares outstanding, basic	76,745,663	76,071,017
Dilutive options (treasury stock method)		5,405,457
Shares issuable upon conversion of 2026 Convertible Note, as if converted	5,769,232	5,769,232
Weighted average common shares outstanding, diluted	82,514,895	87,245,706
Net loss per share attributable to common stockholders, diluted	$ (0.22)	$ (0.24)

Net (Loss) Income Per Share - Schedule of Antidilutive Securities, Excluded from Computation of Diluted Net Loss per Share (Details) - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	14,544,284	2,999,716
Options to Purchase Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	13,618,221	2,999,716
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	926,063

Stock-Based Awards - Additional Information (Details)	3 Months Ended
Stock-Based Awards - Additional Information (Details)	Mar. 31, 2022 $ / shares shares
Stock-Based Awards
Number of shares of common stock available for issuance	2,622,985
2014 and 2006 Stock Incentive Plan
Stock-Based Awards
Number of shares of common stock reserved for issuance	9,766,336
2014 Stock Incentive Plan
Stock-Based Awards
Number of shares of common stock reserved for issuance	456,334
2021 Incentive Plan
Stock-Based Awards
Number of shares of common stock reserved for issuance	6,000,000
2021 Incentive Plan \| Common Stock
Stock-Based Awards
Shares Issuable Under Options, Granted	2,862,203
Exercise price (in dollars per share) \| $ / shares	$ 5.28

Stock-Based Awards - Restricted Stock Units (Details) - 2021 Incentive Plan - Restricted Stock Units (RSUs)	3 Months Ended
	Mar. 31, 2022 shares
Stock-Based Awards
Granted (in shares)	934,479
Vesting period	3 years

Stock-Based Awards - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Stock-based Compensation
Stock-based compensation expense	$ 4,209	$ 3,086
Unrecognized stock-based compensation cost	$ 28,432
Weighted average period of unrecognized stock-based compensation cost expected to be recognized	3 years
Research and Development Expense
Stock-based Compensation
Stock-based compensation expense	$ 1,062	677
Selling and Marketing Expense
Stock-based Compensation
Stock-based compensation expense	1,138	755
General and Administrative Expense
Stock-based Compensation
Stock-based compensation expense	$ 2,009	$ 1,654

Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Specialty Pharma
Related Party Transactions
Expenses incurred	$ 0	$ 126
Accounts payable	0		$ 0
Accrued expenses	0		0
WilmerHale \| Legal Fees. \| Chief Business Officer
Related Party Transactions
Expenses incurred	327	$ 340
Accounts payable	0		119
Accrued expenses	$ 327		$ 68

Common Stock (Details) - Common Stock - 2021 Sales Agreement - USD ($) $ in Thousands	Aug. 09, 2021	May 06, 2022
Common Stock
Maximum aggregate proceeds from offering	$ 100,000
Number of shares issued		0