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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2019	May 01, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	OCUL
Entity Registrant Name	Ocular Therapeutix, Inc.
Entity Central Index Key	0001393434
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		42,836,978
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 76,251	$ 54,062
Accounts receivable	276	201
Inventory	265	217
Prepaid expenses and other current assets	2,380	1,713
Total current assets	79,172	56,193
Property and equipment, net	10,548	10,236
Restricted cash	6,614	6,614
Operating lease assets	5,156
Total assets	101,490	73,043
Current liabilities:
Accounts payable	3,902	2,965
Accrued expenses and other current liabilities	4,037	6,194
Operating lease liabilities	675
Total current liabilities	8,614	9,159
Other liabilities		3,221
Operating lease liabilities, net of current portion	7,909
Derivative liability	11,462
Notes payable, net of discount	24,843	24,788
2026 convertible notes, net	23,014
Total liabilities	75,842	37,168
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized and no shares issued or outstanding at March 31, 2019 and December 31, 2018, respectively
Common stock, $0.0001 par value; 100,000,000 shares authorized and 42,836,978 and 41,518,091 shares issued and outstanding at March 31, 2019 and December 31, 2018	4	4
Additional paid-in capital	340,011	333,114
Accumulated deficit	(314,367)	(297,243)
Total stockholders' equity	25,648	35,875
Total liabilities and stockholders' equity	$ 101,490	$ 73,043

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
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	42,836,978	41,518,091
Common stock, shares outstanding	42,836,978	41,518,091

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue:
Type of Revenue [Extensible List]	us-gaap:ProductMember	us-gaap:ProductMember
Total revenue	$ 492	$ 340
Costs and operating expenses:
Type of Cost, Good or Service [Extensible List]	us-gaap:ProductMember	us-gaap:ProductMember
Cost of product revenue	$ 128	$ 80
Research and development	11,317	8,227
Selling and marketing	3,347	717
General and administrative	5,358	4,771
Total costs and operating expenses	20,150	13,795
Loss from operations	(19,658)	(13,455)
Other income (expense):
Interest income	329	176
Interest expense	(1,018)	(486)
Change in fair value of derivative liability	3,223
Total other income (expense), net	2,534	(310)
Net loss and comprehensive loss	$ (17,124)	$ (13,765)
Net loss per share, basic	$ (0.41)	$ (0.40)
Weighted average common shares outstanding, basic	42,251,292	34,792,848
Net loss per share, diluted	$ (0.45)	$ (0.40)
Weighted average common shares outstanding, diluted	44,174,369	34,792,848

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (17,124)	$ (13,765)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation expense	1,942	1,831
Non-cash interest expense	409	98
Amortization of operating lease asset	187
Change in fair value of derivative liability	(3,223)
Depreciation and amortization expense	589	565
Changes in operating assets and liabilities:
Accounts receivable	(75)	56
Prepaid expenses and other current assets	(667)	197
Inventory	(48)	(17)
Accounts payable	761	(662)
Accrued expenses and deferred rent	(1,891)	(776)
Operating lease liabilities	(246)
Net cash used in operating activities	(19,386)	(12,473)
Cash flows from investing activities:
Purchases of property and equipment	(725)	(381)
Net cash used in investing activities	(725)	(381)
Cash flows from financing activities:
Proceeds from issuance of 2026 convertible notes, net of issuance costs	37,345
Proceeds from exercise of stock options	1	266
Proceeds from issuance of common stock offering, net	4,954	34,990
Repayment of notes payable		(1,029)
Net cash provided by financing activities	42,300	34,227
Net increase in cash, cash equivalents and restricted cash	22,189	21,373
Cash, cash equivalents and restricted cash at beginning of period	60,676	43,152
Cash, cash equivalents and restricted cash at end of period	82,865	64,525
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	176	301
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		$ 285

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2017	$ 3	$ 263,409	$ (237,265)	$ 26,147
Balance, shares at Dec. 31, 2017	29,658,202
Stockholders' Equity
Issuance of common stock upon exercise of stock options		266		266
Issuance of common stock upon exercise of stock options, shares	146,852
Issuance of common stock upon public offering, net of issuance costs	$ 1	34,704		34,705
Issuance of common stock upon public offering, net of issuance costs, shares	7,475,000
Stock-based compensation expense		1,831		1,831
Net loss			(13,765)	(13,765)
Balance at Mar. 31, 2018	$ 4	300,210	(251,030)	49,184
Balance, shares at Mar. 31, 2018	37,280,054
Balance at Dec. 31, 2018	$ 4	333,114	(297,243)	35,875
Balance, shares at Dec. 31, 2018	41,518,091
Stockholders' 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

- Definition

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

+ References + Details

Nature of the Business and Basis of Presentation	3 Months Ended
Nature of the Business and Basis of Presentation	Mar. 31, 2019
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 and building the initial sales and marketing infrastructure for the commercialization of the Company’s approved products and product candidates. 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, 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, 2019, the Company’s lead product candidate 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 rapid change in 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, including to support the planned commercial launch of DEXTENZA. The Company believes that its existing cash and cash equivalents as of March 31, 2019, will enable it to fund its operating expenses, debt service obligations and capital expenditure requirements into the second quarter of calendar year 2020. Management has determined that the Company’s accumulated deficit, history of losses, negative cash flows from operations and future expected losses raise substantial doubt about the Company’s ability to continue as a going concern within one year of the issuance date of these financial statements. 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, 2019, the Company had an accumulated deficit of $314,367. If the Company is unable to obtain other 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 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, 2018 was derived from audited financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited financial statements as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 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, 2018 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 March 31, 2019 and results of operations and cash flows for the three months ended March 31, 2019 and 2018 have been made. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2019.

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

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, the disclosure of contingent assets and liabilities at the date of the 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, the accrual of research and development expenses, including clinical trials, the present value of lease liabilities and the corresponding lease assets, the fair value of derivatives, and the valuation of common stock and stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company’s 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 March 31, 2019 and December 31, 2018, were carried at fair value determined according to the fair value hierarchy described above (see Note 3). The Company’s derivative liability at March 31, 2019 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 (see 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”) (see Note 5) and is carried at its amortized cost. The estimated fair value of the 2026 Convertible Notes was $34,935 at March 31, 2019. 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 most significant input when determining the fair value for disclosure purposes of the valuing the 2026 Convertible Notes is the discount rate. The discount rate 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.

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 $6,614 at March 31, 2019 and December 31, 2018, respectively, on its consolidated balance sheet. The Company held restricted cash as security deposits for the lease of its manufacturing space and corporate headquarters and a financial covenant associated with the terms of its existing debt with lenders for total indebtedness of $25,000, which restricts the Company's withdrawal or usage of $5,000 (Note 8).

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:


	March 31,		March 31,		December 31,		December 31,
	2019		2018		2018		2017
Cash and cash equivalents	$	76,251	$	62,911	$	54,062	$	41,538
Restricted cash		6,614		1,614		6,614		1,614
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$	82,865	$	64,525	$	60,676	$	43,152

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 our 2026 Convertible Notes, 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, 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 February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), a new standard issued to increase transparency and comparability among organizations related to their leasing activities. This standard established a right-of-use model that requires all lessees to recognize right-of-use assets and lease liabilities on their balance sheet that arise from leases as well as provide disclosures with respect to certain qualitative and quantitative information related to a company's leasing arrangements to meet the objective of allowing users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

The FASB subsequently issued the following amendments to ASU 2016-02 that have the same effective date and transition date: ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, ASU No. 2018-20, Narrow-Scope Improvement for Lessors, and ASU No. 2019-01, Leases (Topic 842): Codification Improvements. The Company adopted these amendments with ASU 2016-02 (collectively, the “New Leasing Standards”) effective January 1, 2019.

The Company adopted the New Leasing Standards using the modified retrospective transition approach, as of January 1, 2019, with no restatement of prior periods or cumulative adjustment to accumulated deficit. Upon adoption, the Company elected the package of transition practical expedients, which allowed the Company to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for existing leases. The Company made an accounting policy election to not recognize leases with an initial term of 12 months or less within its consolidated balance sheets and to recognize those lease payments on a straight-line basis in its consolidated statements of operations and comprehensive loss over the lease term.

Upon adoption of the New Leasing Standards the Company recognized operating lease assets of approximately $5,300 and corresponding operating lease liabilities of approximately $8,800, which are included in the Company’s consolidated balance sheet. The adoption of the New Leasing Standards did not have an impact on the Company’s consolidated statements of operations and comprehensive loss.

The Company determines if an arrangement is a lease at contract inception. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company uses its incremental borrowing rate when the implicit rate is not readily determinable based upon the information available at the commencement date in determining the present value of the lease payments. The Company’s incremental borrowing rate is not readily determinable since the terms of its borrowing arrangements, including years to maturity, conversion features, where applicable, collateralization, and cash flow requirements of principal and interests, are not representative of its lease arrangements. Therefore, the Company has used an incremental borrowing rate based on the lowest grade of debt available in the marketplace for the same term as the associated lease.

The Company’s operating leases are reflected in operating lease assets, current portion of operating lease liabilities and operating lease liabilities, net of current portion and in the Company’s consolidated balance sheets. The right of use asset was determined using the present value of the future minimum lease payments over the term of the lease, any lease payments made to the lessor at or before the commencement date, reduced by lease incentives, and initial direct costs incurred by the Company. The liabilities are determined using the present value of the future minimum lease payments.

For additional information on the adoption of the New Leasing Standards, see Note 14 - Leases, to these consolidated financial statements.

On March 31, 2019, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). The new standard simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The Company adopted ASU 2018-07 as required on January 1, 2019, and its adoption did not have any material impact on the Company’s consolidated results of operations.

Fair Value of Financial Assets and Liabilities

3 Months Ended

Mar. 31, 2019

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 assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 and indicate the level of the fair value hierarchy utilized to determine such fair value:


	Fair Value Measurements as of
	March 31, 2019 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	73,184	$	—	$	73,184

Liability:
Derivative liability (see Note 4)		—		—		11,462		11,462
Total	$	—	$	73,184	$	11,462	$	84,646


	Fair Value Measurements as of
	December 31, 2018 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	50,906	$	—	$	50,906
Total	$	—	$	50,906	$	—	$	50,906

During the three months ended March 31, 2019 there were no transfers between Level 1, Level 2 and Level 3.

- 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

Derivative Liability

3 Months Ended

Mar. 31, 2019

Derivative Liability

Derivative Liability

4. Derivative Liability

The 2026 Convertible Notes (Note 5), contained an embedded conversion option that met the criteria to be bifurcated and accounted for separately from the 2026 Convertible Notes (the "Derivative Liability"). The Derivative Liability was recorded at fair value of $14,685 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.

The fair value of the 2026 Convertible Notes with and without the conversion option is estimated using a binomial lattice approach. The key inputs to valuing the 2026 Convertible Notes with the conversion option include the Company’s stock price on the valuation date ($4.67 on March 1, 2019); the expected annual volatility of the Company’s stock (88% as of March 1, 2019) and the discount yield (12.4% as of March 1, 2019), which was derived by making the fair value of the 2026 Convertible Notes equal to the face value on the issuance date. The key inputs to valuing the 2026 Convertible Notes with the conversion option include the Company’s stock price on the valuation date ($3.97 on March 31, 2019); the expected annual volatility of the Company’s stock (86% as of March 31, 2019) and the discount yield (12.1% as of March 31, 2019), which was derived by making the fair value of the 2026 Convertible Notes equal to the face value on the issuance date. Fair value measurements are highly sensitive to changes in these inputs and significant changes in these inputs would result in a significantly higher or lower fair value.

A roll forward of the derivative liability is as follows:


	Three Months Ended
	March 31, 2019
Balance at December 31, 2018	$	—
Initial value		14,685
Change in fair value		(3,223)
Balance at March 31, 2019	$	11,462

Convertible Notes

3 Months Ended

Mar. 31, 2019

Convertible Notes

Convertible Notes

5. Convertible Notes

On March 1, 2019, the Company issued $37,500 of 2026 Convertible Notes. The 2026 Convertible Notes accrue 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 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 either 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 March 31, 2019 is as follows:


	March 31,
	2019
2026 Convertible Notes	$	37,500
Less: unamortized discount		(14,673)
		22,827
Interest		187
Total	$	23,014

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2019
Income Taxes
Income Taxes	6. Income Taxes The Company did not provide for any income taxes in its statement of operations for the three-month periods ended March 31, 2019 or 2018. The Company has provided a valuation allowance for the full amount of its net deferred tax assets because, at March 31, 2019 and December 31, 2018, 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. The Company has not recorded any amounts for unrecognized tax benefits as of March 31, 2019 or December 31, 2018. As of March 31, 2019 and December 31, 2018, the Company had no accrued interest or tax penalties recorded related to income taxes. The Company’s income tax return reporting periods since December 31, 2014 are open to income tax audit examination by the federal and state tax authorities. In addition, because the Company has net operating loss carryforwards, the Internal Revenue Service is permitted to audit earlier years and propose adjustments up to the amount of net operating losses generated in those years.

Collaboration Agreement	3 Months Ended
Collaboration Agreement	Mar. 31, 2019
Collaboration Agreement
Collaboration Agreement	7. Collaboration Agreement In October 2016, the Company entered into a Collaboration, Option and License Agreement (the “Collaboration Agreement”) with Regeneron Pharmaceuticals, Inc. (“Regeneron”) for the development and potential commercialization of products containing the Company’s extended-delivery hydrogel formulation in combination with Regeneron’s large molecule VEGF-targeting compounds for the treatment of retinal diseases. The Collaboration Agreement does not cover the development of any products that deliver small molecule drugs, including tyrosine kinase inhibitors, or TKIs, or deliver large molecule drugs other than those that target VEGF proteins. Under the terms of the Collaboration Agreement, the Company and Regeneron have agreed to conduct a joint research program with the aim of developing an extended-delivery formulation of aflibercept, currently marketed under the tradename Eylea, that is suitable for advancement into clinical development. The Company has granted Regeneron an option (the “Option”) to enter into an exclusive, worldwide license to develop and commercialize products containing the Company’s hydrogel in combination with Regeneron’s large molecule VEGF-targeting compounds (“Licensed Products”). Under the term of the Collaboration Agreement, Regeneron is responsible for funding an initial preclinical tolerability study. If the Option 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. 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. Through March 31, 2019, the Option has not been exercised, and no payments have been made. Under the terms of the Collaboration Agreement, Regeneron has agreed to pay the Company $10,000 upon the exercise of the Option. The Company is also eligible to receive up to $145,000 per Licensed Product upon the achievement of specified development and regulatory milestones, $100,000 per Licensed Product upon first commercial sale of such Licensed Product and up to $50,000 based on the achievement of specified sales milestones for all Licensed Products. In addition, the Company is entitled to tiered, escalating royalties, in a range from a high-single digit to a low-to-mid teen percentage of net sales of Licensed Products. In December 2017, the Company delivered to Regeneron a proposed final formulation for the initial preclinical tolerability study. Regeneron initiated the preclinical study in early 2018. The Company and Regeneron have subsequently reached an understanding that the proposed formulation was not final and have ceased development of it. The Company is currently in discussions with Regeneron, in accordance with the terms of the Collaboration Agreement, regarding the development of an alternative formulation.

Notes Payable

3 Months Ended

Mar. 31, 2019

Notes Payable

Notes payable

8. Notes Payable

The Company entered into a credit and security agreement in 2014 (as amended, the “Credit Agreement”) which most recently was amended in March 2019 and has a total borrowing capacity of $25,000 which has been fully drawn down as of March 31, 2019.

In December 2018, the Company amended (the “2018 Amended Credit Facility”) the terms of its debt with existing lenders for total indebtedness of $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 2018 Amended 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 2018 Amended Credit Facility, 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 2018 Amended 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 2018 Amended 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.

Under the 2018 Amended Credit Facility the Company is required to maintain a minimum of $5,000 of cash on hand as a financial covenant to the borrowing arrangement, which the Company has included in long-term restricted cash in the consolidated balance sheet. There are no other financial covenants associated with the 2018 Amended Credit Facility; however, there are 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 the covenants. The obligations under the 2018 Amended Credit Facility 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 2018 Amended 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:


	March 31,		December 31,
	2019		2018
Borrowings outstanding	$	25,000	$	25,000
Accrued exit fee		49		5
Unamortized discount		(206)		(217)
	$	24,843	$	24,788

As of March 31, 2019, the annual repayment requirements for the 2018 Amended 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
Remainder of 2019	$	—	$	1,864	$	1,864
2020		—		2,480		2,480
2021		8,333		2,094		10,427
2022		8,333		1,270		9,603
2023		8,334		1,320		9,654
	$	25,000	$	9,028	$	34,028

Interest paid amounted to $475 and $390 for the three months ended March 31, 2019 and 2018, respectively.

Common Stock	3 Months Ended
Common Stock	Mar. 31, 2019
Common Stock
Common Stock	9. Common Stock In January 2018, the Company completed a follow-on offering of its common stock at a public offering price of $5.00 per share. The offering consisted of 7,475,000 shares of common stock sold by the Company, including those shares sold in connection with the exercise by the underwriter of its option to purchase additional shares. The Company received net proceeds from the follow-on offering of $34,704 after deducting underwriting discounts and commissions and expenses. In November 2016, the Company entered into a controlled equity offering sales agreement (the “2016 Sales Agreement”) with Cantor Fitzgerald & Co., under which the Company could offer and sell its common stock having aggregate proceeds of up to $40,000 from time to time. In the three months ended March 31, 2019, the Company sold 1,318,481 shares of common stock at-the-market under the 2016 Sales Agreement, resulting in net proceeds of approximately $4,954 after underwriting discounts and commissions and expenses. Through March 31, 2019, the Company has sold 6,330,222 shares of common stock at-the-market under the 2016 Sales Agreement, resulting in net proceeds of approximately $38,381 after underwriting discounts and commissions and expenses. As of February 25, 2019, the Company had no amounts remaining available for future sale under the 2016 Sales Agreement. On February 28, 2019, pursuant to the 2016 Sales Agreement, the Company delivered a termination notice to Cantor, terminating the 2016 Sales Agreement.

Net Loss Per Share

3 Months Ended

Mar. 31, 2019

Net Loss Per Share

Net Loss Per Share

10. Net Loss Per Share

Basic and diluted net loss per share was calculated as follows for the three months ended March 31, 2019 and 2018:


	Three Months Ended March 31,
	2019			2018
Numerator:
Net loss attributable to common stockholders	$	(17,124)	$	(13,765)
Denominator:
Weighted average common shares outstanding, basic		42,251,292		34,792,848
Net loss per share attributable to common stockholders, basic	$	(0.41)	$	(0.40)

Weighted average common shares outstanding, diluted		44,174,369		34,792,848
Net loss per share attributable to common stockholders, diluted	$	(0.45)	$	(0.40)

A reconciliation of net loss attributable to common stockholders for basic and diluted net loss per share is as follows:


	Three Months Ended March 31,
	2019			2018
Net loss attributable to common stockholders, basic	$	(17,124)	$	(13,765)
Interest expense on 2026 Convertible Notes		356		—
Change in fair value of derivative liability		(3,223)		—
Net loss attributable to common stockholders, diluted	$	(19,991)	$	(13,765)

Weighted average common shares outstanding, basic		42,251,292		34,792,848
Shares issuable upon conversion of 2026 Convertible Notes, as if converted		1,923,077		—
Weighted average common shares outstanding, diluted		44,174,369		34,792,848

Net loss per share attributable to common stockholders, diluted	$	(0.45)		(0.40)

The Company excluded the following common stock equivalents, outstanding as of March 31, 2019 and 2018, from the computation of diluted net loss per share for the three months ended March 31, 2019 and 2018 because they had an anti-dilutive impact due to the net loss incurred for the periods.


	As of March 31,
	2019	2018
Options to purchase common stock	7,296,948	5,062,284
Warrants for the purchase of common stock	18,939	18,939
	7,315,887	5,081,223

Stock-Based Awards

3 Months Ended

Mar. 31, 2019

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, 2019, the number of shares available for issuance under the 2014 Plan was increased by 1,659,218. During the three months ended March 31, 2019, the Company granted options to purchase 2,290,400 shares of common stock at a weighted exercise price of $4.10 per share. As of March 31, 2019, 1,173,938 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, 2019, the number of shares available for issuance under the 2014 Plan was increased by 207,402. During the three months ended March 31, 2019, no shares of common stock were issued. As of March 31, 2019, 608,912 shares remained available for issuance under the ESPP.

Inducement Stock Option Awards

On June 20, 2017, the Company issued to Antony Mattessich, who became a director of the Company on June 20, 2017 and the Company’s President and Chief Executive Officer on July 26, 2017, a non-statutory stock option to purchase an aggregate of 590,000 shares of the Company’s common stock at an exercise price of $10.94 per share. Subject to Mr. Mattessich’s continued service to the Company, the stock option will vest over a four-year period, with 25% of the shares underlying the option award vesting on the one-year anniversary of the grant date and the remaining 75% of the shares underlying the award vesting monthly thereafter. The stock option was issued outside of the Company’s 2014 Plan as an inducement material to Mr. Mattessich’s acceptance of entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

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
	March 31,
	2019		2018
Research and development	$	620	$	608
Selling and marketing		219		111
General and administrative		1,103		1,112
	$	1,942	$	1,831

As of March 31, 2019, the Company had an aggregate of $15,624 of unrecognized stock-based compensation cost, which is expected to be recognized over a weighted average period of 2.8 years.

As of March 31, 2019, there were outstanding unvested service-based stock options held by nonemployees for the purchase of 26,459 shares of common stock.

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 31, 2019
Commitments and Contingencies.
Commitments and Contingencies	12. Commitments and Contingencies Intellectual Property Licenses The Company entered into a license agreement with Incept LLC (“Incept”) to use and develop certain intellectual property rights in 2007. The Company and Incept amended and restated the agreement in January 2012 (such amended and restated agreement, the “Prior Agreement”). Under the Prior Agreement, 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. On September 13, 2018 (the “Effective Date”), the Company and Incept further amended and restated the license agreement in full (the “Second Amended Agreement”) to expand the scope of the Company’s intellectual property license and modify future intellectual property ownership and other rights thereunder. 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 Prior Agreement. Through March 31, 2019, royalties paid under this agreement related to product sales were $244 and have been charged to cost of product revenue. License Rights; Ownership of Intellectual Property In the Second Amended Agreement, the parties have agreed to expand the field of use of the exclusive, worldwide, perpetual, irrevocable license held by the Company under the Prior Agreement to include specified intellectual property rights and technology owned or controlled by Incept to make, have made, use, offer for sale, sell, sublicense, have sublicensed, offer for sublicense and import, (i) consistent with the Prior Agreement, products delivered to or around the human eye for diagnostic, therapeutic or prophylactic purposes relating to all human ophthalmic diseases or conditions (the “Ophthalmic Field of Use”) and (ii) as a result of the expansion of the scope of the license pursuant to the Prior Agreement, products delivered for the treatment of acute post-surgical pain or for the treatment of ear, nose and/or throat diseases or conditions, subject to specified exceptions (the “Additional Field of Use”). The parties have further agreed to expand the field of use of the license for certain patents, patent applications and other rights pertaining to shape-changing hydrogel formulations thereunder (the “Shape-Changing IP”) to include all fields except those involving the nerves and associated tissues specified in the Second Amended Agreement. The Company will solely own, without a license to Incept, all intellectual property rights conceived solely by one or more individuals from the Company (“Company Individuals”) after the Effective Date, subject to exceptions specified therein. Subject to certain exceptions specified in the Second Amended Agreement, Incept will own and license to the Company (i) all intellectual property rights included in the Prior Agreement (“Original IP”) in the Ophthalmic Field of Use and the Additional Field of Use, (ii) intellectual property rights in the field of drug delivery conceived by one or more Company Individuals on or before the Effective Date (“Incept IP”), and (iii) intellectual property rights in the field of drug delivery conceived by one or more Company Individuals jointly with one or more individuals from Incept, including Dr. Sawhney (“Incept Individuals”), after the Effective Date (“Joint IP” and, collectively with the Original IP and the Incept IP, the “Licensed IP”). Financial Terms The Company and any of its sublicensees are obligated to pay Incept royalties as follows under the Second Amended Agreement: (i) consistent with the Prior Agreement, a royalty equal to a low single-digit percentage of net sales by the Company or its affiliates of products, devices, materials, or components thereof (“Licensed Products”), including or covered by Original IP, excluding the Shape-Changing IP, in the Ophthalmic Field of Use; (ii) a royalty equal to a mid-single-digit percentage of net sales by the Company or its affiliates of Licensed Products including or covered by Original IP, excluding the Shape-Changing IP, in the Additional Field of Use; and (iii) a royalty equal to a low single-digit percentage of net sales by the Company or its affiliates of Licensed Products including or covered by Incept IP or Joint IP in the field of drug delivery. Royalty obligations under the Second Amended Agreement commence with the first commercial sale of a Licensed Product described above and terminate upon the expiration of the last-to-expire patents included in the Licensed IP, as applicable. Any sublicensee of the Company also will be obligated to pay Incept royalties on net sales of Licensed Products made by it and will be bound by the terms of the Second Amended Agreement to the same extent as the Company. Additionally, at its sole discretion, Incept may require, as a condition of any sublicense by the Company in the Additional Field of Use and in exchange for a reduction in the royalties owed on net sales of Licensed Products described above, payments equal to a mid-teen percentage of any upfront payment and, subject to certain conditions, other payments received by the Company from the sublicensee. Patent Prosecution and Litigation Incept will continue to have sole control and responsibility for ongoing prosecution of patents included in the Original IP, and the Company will have sole control and responsibility for ongoing prosecution of patents and patent applications included in or arising under the Incept IP or Joint IP. The parties have agreed to work together in good faith to enter into a separate agreement under which, subject to certain limitations, the Company would assume control of the prosecution of patents and patent applications included in or arising under the Shape-Changing IP. The Company has the right, subject to certain conditions, to bring suit against third parties who infringe the patents included in the Original IP in the Ophthalmic Field of Use or the Additional Field of Use, patents included in the Incept IP in the drug delivery filed, patents included in the Joint IP in the drug delivery field, and patents included in the Shape-Changing IP in all fields except as described above. The Company has also agreed, if requested by Incept, to enter into a joint defense and prosecution agreement for the purpose of allowing the parties to share confidential and attorney-client privileged information regarding the possible infringement of one or more patents covered by the Second Amended Agreement. The Company is responsible for all costs incurred in prosecuting any infringement action it brings. Term and Termination The Second Amended Agreement will expire on the later of (i) the expiration or disclaimer by the Company of the last valid claim of an issued and unexpired patent included in the Licensed IP or (ii) the final unappealable rejection or abandonment of the last pending patent application arising under the Licensed IP. Either party may terminate the Second Amended Agreement in the event of the other party’s insolvency, bankruptcy or comparable proceedings, or if the other party materially breaches the agreement and does not cure such breach during a specified cure period. Collaboration Agreement In October 2016, the Company entered into the Collaboration Agreement with Regeneron as described in Note 7. Under the terms of the Collaboration Agreement, the Company has granted Regeneron an Option to enter into an exclusive, worldwide license to develop and commercialize products containing the Company’s hydrogel in combination with Regeneron’s large molecule VEGF-targeting compounds. If the Option is exercised, the Company is obligated to reimburse Regeneron for certain development costs incurred 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. Through March 31, 2019, the Option has not been exercised and no payments have been made to Regeneron. 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. 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, all current board members, one former board member, 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. In addition, the Company has received a subpoena from the SEC, dated December 15, 2017, requesting documents and information concerning DEXTENZA (dexamethasone insert) 0.4mg, including related communications with the FDA, investors and others. The Company received a second subpoena from the SEC on August 21, 2018, requesting documents and information concerning its participation in two investor conferences in June 2017. By letter dated May 2, 2019, the SEC notified the Company that the SEC had concluded its investigation and did not intend to recommend an enforcement action against the Company or any individuals. 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.

Related Party Transactions	3 Months Ended
Related Party Transactions	Mar. 31, 2019
Related Party Transactions
Related Party Transactions	13. Related Party Transactions The Company has a license agreement with Incept to use and develop certain patent rights that it entered into in 2007, amended and restated in January 2012 and further amended and restated in September 2018 (see Note 12). Incept and certain owners of Incept are shareholders of the Company. The Company’s Chairman of the Board of Directors and former President and Chief Executive Officer (“CEO”) is a general partner of Incept and has a 50% ownership stake in Incept. Since October 2017, the Company has engaged McCarter English LLP (“McCarter”) to provide legal services to the Company, including with respect to intellectual property matters. The Company’s Senior Vice President, Technical Operations, Kevin Hanley, who joined the Company in January 2018, is married to a partner at McCarter, who has not participated in providing legal services to the Company. In addition, Jonathan M. Sparks, Ph.D., a partner at McCarter & English, has served as the Company’s in-house counsel since October 2017. The Company incurred fees for legal services rendered by McCarter of $307 and $93 for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, there was $136 recorded in accounts payable and $100 recorded in accrued expenses for McCarter.

Leases

3 Months Ended

Mar. 31, 2019

Leases

Leases

14. Leases

The Company leases real estate, including laboratory, manufacturing and office space, and certain equipment. The Company’s leases have remaining lease terms ranging from less than 1 year to 9 years. Certain leases include one or more options to renew, exercised at our sole discretion, with renewal terms that can extend the lease term from one year to six years. All of the Company’s leases qualify as operating leases. The following table summarizes the presentation in the Company’s consolidated balance sheet of its operating leases:


		March 31,
	Balance sheet location	2019
Assets:
Operating lease assets	Operating lease assets	$	5,156

Liability:
Current operating lease liabilities	Operating lease liabilities	$	675
Non-current operating lease liabilities	Operating lease liabilities, net of current portion		7,909
Total Operating lease liabilities:		$	8,584

The following table summarizes the effect of lease costs in the Company’s consolidated statements of operations and comprehensive loss:


		For the
		Three Months Ended
		March 31,
	Statement of operations and comprehensive loss location	2019
Operating lease costs	Research and development	$	369
	Selling and marketing		25
	General and administrative		48
		$	442

The minimum lease payments for the next five years and thereafter is expected to be as follows:


	March 31,
Year Ending December 31,	2019
2019 (remaining nine months)		1,361
2020		1,850
2021		1,886
2022		1,936
2023		1,730
Thereafter		5,224
Total lease payments	$	13,987
Less: interest		5,403
Present value of operating lease liabilities	$	8,584

Under the prior lease guidance minimum rental commitments under non-cancelable leases for each of the next five years and total thereafter as of December 31, 2018, were as follows:


	2019		2020	2021	2022	2023	Thereafter	Total
Minimum lease payments	$	1,809	1,850	1,886	1,936	1,730	5,224	$	14,435

The weighted average remaining lease term and weighted average discount rate of our operating leases are as follows:


	March 31,
	2019
Weighted average remaining lease term in years		7.6
Weighted average discount rate		13.55	%

Supplemental disclosure of cash flow information related to our operating leases included in cash flows provided by operating activities in our consolidated statements of cash flows is as follows:


	For the
	Three Months Ended
	March 31,
	2019
Cash paid for amounts included in the measurement of lease liabilities	$	501

Subsequent Events	3 Months Ended
Subsequent Events	Mar. 31, 2019
Subsequent Events
Subsequent Events	15. Subsequent Events On April 4, 2019, the Company entered into a non-cancelable lease for 30,036 square feet of space located at 24 Crosby Street in Bedford, Massachusetts to be used for office space. The five-year lease commenced on April 18, 2019 and terminates on March 24, 2024 and does not include any lease renewal options. The Company expects this lease will result in a right of use asset and a related lease liability of approximately $2,000. On April 5, 2019, the Company entered into an Open Market Sale Agreement (the “2019 Sales Agreement”) with Jefferies, LLC (“Jefferies”), under which the Company may offer and sell its common stock having aggregate proceeds of up to $50,000 from time to time through Jefferies, acting as agent. Through May 9, 2019, the Company has not sold any shares under the 2019 Sales Agreement.

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

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 (see Note 8) are recorded at amortized costs, which approximates fair value due to their short-term nature.

Derivative Liability

Restricted Cash


	March 31,		March 31,		December 31,		December 31,
	2019		2018		2018		2017
Cash and cash equivalents	$	76,251	$	62,911	$	54,062	$	41,538
Restricted cash		6,614		1,614		6,614		1,614
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$	82,865	$	64,525	$	60,676	$	43,152

Net Loss Per Share

Recently Issued and Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

For additional information on the adoption of the New Leasing Standards, see Note 14 - Leases, to these consolidated financial statements.

Summary of Significant Accounting Policies - (Tables)

3 Months Ended

Mar. 31, 2019

Summary of Significant Accounting Policies

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,		December 31,		December 31,
	2019		2018		2018		2017
Cash and cash equivalents	$	76,251	$	62,911	$	54,062	$	41,538
Restricted cash		6,614		1,614		6,614		1,614
Total cash, cash equivalents and restricted cash as shown on the statements of cash flows	$	82,865	$	64,525	$	60,676	$	43,152

Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

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, 2019 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	73,184	$	—	$	73,184

Liability:
Derivative liability (see Note 4)		—		—		11,462		11,462
Total	$	—	$	73,184	$	11,462	$	84,646


	Fair Value Measurements as of
	December 31, 2018 Using:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	—	$	50,906	$	—	$	50,906
Total	$	—	$	50,906	$	—	$	50,906

Derivative Liability (Tables)

3 Months Ended

Mar. 31, 2019

Derivative Liability

Summary of roll forward of the derivative liability

A roll forward of the derivative liability is as follows:


	Three Months Ended
	March 31, 2019
Balance at December 31, 2018	$	—
Initial value		14,685
Change in fair value		(3,223)
Balance at March 31, 2019	$	11,462

- 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.

+ References

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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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+ Details

Convertible Notes (Tables)

3 Months Ended

Mar. 31, 2019

Convertible Notes

Summary of the 2026 Convertible Notes

A summary of the 2026 Convertible Notes at March 31, 2019 is as follows:


	March 31,
	2019
2026 Convertible Notes	$	37,500
Less: unamortized discount		(14,673)
		22,827
Interest		187
Total	$	23,014

Notes Payable (Tables)

3 Months Ended

Mar. 31, 2019

Notes Payable

Schedule of borrowings outstandings


	March 31,		December 31,
	2019		2018
Borrowings outstanding	$	25,000	$	25,000
Accrued exit fee		49		5
Unamortized discount		(206)		(217)
	$	24,843	$	24,788

Schedule of Annual Repayment Requirements for Credit Facility



			Interest and
Year Ending December 31,	Principal		Final Payment		Total
Remainder of 2019	$	—	$	1,864	$	1,864
2020		—		2,480		2,480
2021		8,333		2,094		10,427
2022		8,333		1,270		9,603
2023		8,334		1,320		9,654
	$	25,000	$	9,028	$	34,028

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Net Loss Per Share

Schedule of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders

Basic and diluted net loss per share was calculated as follows for the three months ended March 31, 2019 and 2018:


	Three Months Ended March 31,
	2019			2018
Numerator:
Net loss attributable to common stockholders	$	(17,124)	$	(13,765)
Denominator:
Weighted average common shares outstanding, basic		42,251,292		34,792,848
Net loss per share attributable to common stockholders, basic	$	(0.41)	$	(0.40)

Weighted average common shares outstanding, diluted		44,174,369		34,792,848
Net loss per share attributable to common stockholders, diluted	$	(0.45)	$	(0.40)

A reconciliation of net loss attributable to common stockholders for basic and diluted net loss per share is as follows:


	Three Months Ended March 31,
	2019			2018
Net loss attributable to common stockholders, basic	$	(17,124)	$	(13,765)
Interest expense on 2026 Convertible Notes		356		—
Change in fair value of derivative liability		(3,223)		—
Net loss attributable to common stockholders, diluted	$	(19,991)	$	(13,765)

Weighted average common shares outstanding, basic		42,251,292		34,792,848
Shares issuable upon conversion of 2026 Convertible Notes, as if converted		1,923,077		—
Weighted average common shares outstanding, diluted		44,174,369		34,792,848

Net loss per share attributable to common stockholders, diluted	$	(0.45)		(0.40)

Schedule of Antidilutive Securities, Excluded from Computation of Diluted Net Loss per Share


	As of March 31,
	2019	2018
Options to purchase common stock	7,296,948	5,062,284
Warrants for the purchase of common stock	18,939	18,939
	7,315,887	5,081,223

Stock-Based Awards (Tables)

3 Months Ended

Mar. 31, 2019

Stock-Based Awards

Schedule of Stock-Based Compensation Expense Related to Stock Options and Restricted Common Stock


	Three Months Ended
	March 31,
	2019		2018
Research and development	$	620	$	608
Selling and marketing		219		111
General and administrative		1,103		1,112
	$	1,942	$	1,831

Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases

Summary of the presentation in the Company's consolidated balance sheet of its operating leases


		March 31,
	Balance sheet location	2019
Assets:
Operating lease assets	Operating lease assets	$	5,156

Liability:
Current operating lease liabilities	Operating lease liabilities	$	675
Non-current operating lease liabilities	Operating lease liabilities, net of current portion		7,909
Total Operating lease liabilities:		$	8,584

Summary of lease cost


		For the
		Three Months Ended
		March 31,
	Statement of operations and comprehensive loss location	2019
Operating lease costs	Research and development	$	369
	Selling and marketing		25
	General and administrative		48
		$	442

Schedule of minimum lease payments


	March 31,
Year Ending December 31,	2019
2019 (remaining nine months)		1,361
2020		1,850
2021		1,886
2022		1,936
2023		1,730
Thereafter		5,224
Total lease payments	$	13,987
Less: interest		5,403
Present value of operating lease liabilities	$	8,584

Schedule of future minimum lease payments under prior guidance

Under the prior lease guidance minimum rental commitments under non-cancelable leases for each of the next five years and total thereafter as of December 31, 2018, were as follows:


	2019		2020	2021	2022	2023	Thereafter	Total
Minimum lease payments	$	1,809	1,850	1,886	1,936	1,730	5,224	$	14,435

Summary of supplemental cash flow information related to operating leases


	March 31,
	2019
Weighted average remaining lease term in years		7.6
Weighted average discount rate		13.55	%

Summary of weighted average remaining lease term and weighted average discount rate of our operating leases


	For the
	Three Months Ended
	March 31,
	2019
Cash paid for amounts included in the measurement of lease liabilities	$	501

Nature of the Business and Basis of Presentation - Nature of Business (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Nature of the Business and Basis of Presentation
Accumulated deficit	$ 314,367	$ 297,243

Summary of Significant Accounting Policies - Fair Value Measurements and Derivative Liability (Details) - 2026 Convertible Notes - USD ($) $ in Thousands	Mar. 01, 2019	Mar. 31, 2019
Short-term Debt [Line Items]
2026 Convertible notes	$ 37,500	$ 37,500
Estimated fair value		$ 34,935
Maximum beneficial ownership percent	19.99%

Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	12 Months Ended
	Dec. 31, 2018	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
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	$ 54,062	$ 76,251	$ 54,062	$ 62,911	$ 41,538
Restricted cash	6,614	6,614	6,614	1,614	1,614
Total cash, cash equivalents and restricted cash as shown on the statement of cash flow	60,676	82,865	60,676	$ 64,525	$ 43,152	$ 43,152
2018 Amended Credit Facility
Restricted Cash
Total indebtedness	25,000	25,000	25,000
Minimum cash in hand as a financial covenant	5,000	5,000	5,000
Security deposit
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:
Restricted cash	$ 6,614	$ 6,614	$ 6,614

Summary of Significant Accounting Policies - ASU 2016-02 (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019
Recently Issued Accounting Pronouncements
Operating lease assets	$ 5,156
Operating lease liabilities	$ 8,584
Adjustment \| Accounting Standards Update 2016-02
Recently Issued Accounting Pronouncements
Operating lease assets		$ 5,300
Operating lease liabilities		$ 8,800

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, 2019	Mar. 01, 2019	Dec. 31, 2018
Liability:
Derivative liability	$ 11,462	$ 14,685
Recurring Basis
Assets:
Total assets at fair value			$ 50,906
Liability:
Derivative liability	11,462
Total liabilities at fair value	84,646
Money Market Funds \| Recurring Basis
Assets:
Cash equivalents	73,184		50,906
Level 2 \| Recurring Basis
Assets:
Total assets at fair value			50,906
Liability:
Total liabilities at fair value	73,184
Level 2 \| Money Market Funds \| Recurring Basis
Assets:
Cash equivalents	73,184		$ 50,906
Level 3 \| Recurring Basis
Liability:
Derivative liability	11,462
Total liabilities at fair value	$ 11,462

Fair Value of Financial Assets and Liabilities - Additional Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Fair Value of Financial Assets and Liabilities
Transfers between fair value measurement levels	$ 0

Derivative Liability - Other (Details)	Mar. 31, 2019 USD ($) $ / shares	Mar. 01, 2019 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, fair value	$ 11,462,000	$ 14,685,000
2026 Convertible Notes \| Conversion price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	3.97	4.67
2026 Convertible Notes \| Expected annual volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.86	0.88
2026 Convertible Notes \| Discount yield
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.121	0.124

Derivative Liability - Roll forward (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Roll forward of the derivative liability
Initial value	$ 14,685
Change in fair value	(3,223)
Balance at end of period	$ 11,462

Convertible Notes - Other (Details)		3 Months Ended
Convertible Notes - Other (Details)	Mar. 01, 2019 USD ($) D $ / shares	Mar. 31, 2019 USD ($) $ / shares	Dec. 31, 2018 $ / shares
Senior Convertible Notes
Common stock, par value		$ 0.0001	$ 0.0001
2026 Convertible Notes
Senior Convertible Notes
Debt issued \| $	$ 37,500,000	$ 37,500,000
Interest rate (as a percent)	6.00%
Common stock, par value	$ 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	$ 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

Convertible Notes - Summary (Details) - 2026 Convertible Notes - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 01, 2019
Senior Convertible Notes
2026 Convertible notes	$ 37,500	$ 37,500
Less: unamortized discount	(14,673)
Carrying amount, excluding deferred interest	22,827
Deferred interest	187
Total	$ 23,014

Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Income Taxes
Unrecognized tax benefits	$ 0	$ 0
Accrued interest or tax penalties related to income taxes	$ 0	$ 0

Collaboration Agreements - Additional Information (Details) - Collaboration Agreement - Regeneron $ in Thousands	1 Months Ended
	Oct. 31, 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 - Additional Information (Details) $ in Thousands	1 Months Ended	3 Months Ended		12 Months Ended
	Dec. 31, 2018 USD ($) installment	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
2014 Credit Facility
Notes Payable
Borrowing capacity under the agreement	$ 25,000			$ 25,000
2018 Amended Credit Facility
Notes Payable
Borrowings outstanding	25,000	$ 25,000		$ 25,000
Repayments of debt, Principal	$ 694	25,000
Number of equal monthly installments \| installment	36
Final payment due (as a percent)	3.50%			3.50%
Additional final payment	$ 875	875		$ 875
Minimum cash in hand as a financial covenant	5,000	5,000		5,000
Interest paid		$ 475	$ 390
2018 Amended Credit Facility \| Achievement of certain milestones
Notes Payable
Repayments of debt, Principal	$ 1,042
Number of equal monthly installments \| installment	24
2018 Amended Credit Facility \| LIBOR
Notes Payable
Borrowings outstanding	$ 25,000			$ 25,000
Effective annual interest rate (as a percent)	9.76%			9.76%
Interest rate floor (as a percent)	2.00%			2.00%
Basis spread (as a percent)	7.25%

Notes Payable - Borrowings Outstanding (Details) - 2018 Amended Credit Facility - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Notes Payable
Borrowings outstanding	$ 25,000	$ 25,000
Accrued exit fee	49	5
Less: unamortized discount	(206)	(217)
Borrowings	$ 24,843	$ 24,788

Notes Payable - Schedule of Annual Repayment Requirements for Credit Facility (Details) - 2018 Amended Credit Facility - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Dec. 31, 2018	Mar. 31, 2019
Annual repayment requirements
Credit Facility, Principal	$ 694	$ 25,000
Credit Facility, Interest and Final Payment		9,028
Credit Facility, Total		34,028
2019
Annual repayment requirements
Credit Facility, Interest and Final Payment		1,864
Credit Facility, Total		1,864
2020
Annual repayment requirements
Credit Facility, Interest and Final Payment		2,480
Credit Facility, Total		2,480
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

Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended		29 Months Ended
	Nov. 30, 2016	Jan. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Feb. 25, 2019
Common Stock
Net proceeds from issuance of common stock			$ 4,954	$ 34,990
Common Stock
Common Stock
Number of shares issued			1,318,481	7,475,000
Common Stock \| 2016 Sales Agreement
Common Stock
Maximum aggregate proceeds from offering	$ 40,000
Number of shares issued			1,318,481		6,330,222
Net proceeds from issuance of common stock			$ 4,954		$ 38,381
Aggregate value available for issuance						$ 0
Common Stock \| Follow-on Offering
Common Stock
Common stock, price per share		$ 5.00
Number of shares issued		7,475,000
Net proceeds from issuance of common stock		$ 34,704

Net Loss Per Share - Basic and Diluted Net Loss Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Basic and diluted net loss per share attributable to common stockholders:
Net loss attributable to common stockholders	$ (17,124)	$ (13,765)
Weighted average common shares outstanding, basic	42,251,292	34,792,848
Net loss per share attributable to common stockholders, basic	$ (0.41)	$ (0.40)
Weighted average common shares outstanding, diluted	44,174,369	34,792,848
Net loss per share attributable to common stockholders, diluted	$ (0.45)	$ (0.40)

- Definition

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

+ References

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-Name Accounting Standards Codification
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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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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 Per Share - Reconciliation of Net Loss Attributable to Common Stockholders for Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Reconciliation of net loss attributable to common stockholders for basic and diluted net loss per share
Net loss attributable to common stockholders basic	$ (17,124)	$ (13,765)
Interest expense on 2026 Convertible Note	356
Gain on change in fair value of derivative liability	(3,223)
Net loss attributable to common stockholders diluted	$ (19,991)	$ (13,765)
Weighted average common shares outstanding, basic	42,251,292	34,792,848
Shares issuable upon conversion of 2026 Convertible Note, as if converted	1,923,077
Weighted average common shares outstanding, diluted	44,174,369	34,792,848
Net loss per share attributable to common stockholders, diluted	$ (0.45)	$ (0.40)

- Definition

+ References

+ Details

Net Loss Per Share - Schedule of Antidilutive Securities, Excluded from Computation of Diluted Net Loss per Share (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	7,315,887	5,081,223
Options to Purchase Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	7,296,948	5,062,284
Warrant \| Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total common stock equivalents	18,939	18,939

Stock-Based Awards - Additional Information (Details) - Common Stock - $ / shares	3 Months Ended
	Mar. 31, 2019	Jan. 01, 2019
2014 Stock Incentive Plan
Stock-Based Awards
Increased number of shares of common stock reserved for issuance		1,659,218
Number of shares of common stock available for issuance	1,173,938
Options granted to purchase shares of common stock	2,290,400
Exercise price (in dollars per share)	$ 4.10
2014 Employee Stock Purchase Plan
Stock-Based Awards
Increased number of shares of common stock reserved for issuance		207,402
Number of shares of common stock available for issuance	608,912
Issuance of common stock in connection with employee stock purchase plan, shares	0

Stock-Based Awards - Inducement Stock Option Awards (Detail) - Non-statutory Stock Option - Management	Jun. 20, 2017 $ / shares shares
Stock-Based Awards
Shares Issuable Under Options, Granted \| shares	590,000
Exercise price (in dollars per share) \| $ / shares	$ 10.94
Vesting period	4 years
Percentage of shares underlying the option award vesting on first anniversary	25.00%
Percentage of shares underlying the option award vesting monthly after the first anniversary	75.00%

Stock-Based Awards - Stock-Based Compensation (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock-based Compensation
Stock-based compensation expense	$ 1,942	$ 1,831
Unrecognized stock-based compensation cost	$ 15,624
Weighted average period of unrecognized stock-based compensation cost expected to be recognized	2 years 9 months 18 days
Unvested service-based stock options held by nonemployees	26,459
Research and Development Expense
Stock-based Compensation
Stock-based compensation expense	$ 620	608
Selling and Marketing Expense
Stock-based Compensation
Stock-based compensation expense	219	111
General and Administrative Expense
Stock-based Compensation
Stock-based compensation expense	$ 1,103	$ 1,112

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	30 Months Ended	39 Months Ended
	Oct. 31, 2016	Mar. 31, 2019	Mar. 31, 2019
Incept
Commitments and Contingencies
Payments for Royalties			$ 244
Regeneron \| Collaboration Agreement
Commitments and Contingencies
Payments made under the collaboration agreement		$ 0
Regeneron \| Collaboration Agreement \| Maximum
Commitments and Contingencies
Reimbursable clinical development costs	$ 25,000
Potential increase in reimbursable clinical development costs	$ 5,000

Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Incept \| Chief Executive Officer
Related Party Transactions
Ownership interest in related party by board member (as a percent)	50.00%
McCarter \| Legal Fees \| Senior Vice President
Related Party Transactions
Expenses incurred	$ 307	$ 93
Accounts payable	136
Accrued expenses	$ 100

Leases - Other (Details)	3 Months Ended
Leases - Other (Details)	Mar. 31, 2019
Lessee, Lease, Description [Line Items]
Options to renew	true
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms	1 year
Renewal terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms	9 years
Renewal terms	6 years

Leases - Balance sheet presentation (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Assets
Operating lease assets	$ 5,156
Liabilities
Current operating lease liabilities	675
Noncurrent operating lease liabilities	7,909
Total operating lease liabilities	$ 8,584

Leases - Operating lease costs (Details) $ in Thousands	3 Months Ended
Leases - Operating lease costs (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease costs	$ 442
Research and Development Expense
Lessee, Lease, Description [Line Items]
Operating lease costs	369
Selling and Marketing Expense
Lessee, Lease, Description [Line Items]
Operating lease costs	25
General and Administrative Expense
Lessee, Lease, Description [Line Items]
Operating lease costs	$ 48

Leases - Future minimum payments (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Operating Lease Liabilities, Payments Due [Abstract]
2019 (remaining nine months)	$ 1,361
2020	1,850
2021	1,886
2022	1,936
2023	1,730
Thereafter	5,224
Total lease payments	13,987
Less: interest	5,403
Present value of operating lease liabilities	$ 8,584

Leases - Commitments under prior lease guidance (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Minimum lease payments
2019	$ 1,809
2020	1,850
2021	1,886
2022	1,936
2023	1,730
Thereafter	5,224
Total	$ 14,435

Leases - Terms and discount rate (Details) $ in Thousands	3 Months Ended
Leases - Terms and discount rate (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Leases
Weighted average remaining lease term	7 years 7 months 6 days
Weighted-average discount rate	13.55%
Supplemental disclosure of cash flow information related to operating leases
Cash paid for amounts included in the measurement of lease liabilities	$ 501

Subsequent Event - Additional Information (Detail)			3 Months Ended
Subsequent Event - Additional Information (Detail)	Apr. 05, 2019 USD ($)	Apr. 04, 2019 USD ($) ft²	Mar. 31, 2019 USD ($) shares	Mar. 31, 2018 shares
Subsequent Events
Operating lease assets			$ 5,156,000
Operating Lease, Liability			$ 8,584,000
Maximum
Subsequent Events
Term of lease			9 years
Common Stock
Subsequent Events
Number of shares issued \| shares			1,318,481	7,475,000
Subsequent Event \| Office space lease, Bedford, Massachusetts
Subsequent Events
Area covered under lease \| ft²		30,036
Term of lease		5 years
Subsequent Event \| Scenario Forecast Adjustment \| Office space lease, Bedford, Massachusetts
Subsequent Events
Operating lease assets		$ 2,000
Operating Lease, Liability		$ 2,000
Subsequent Event \| Common Stock \| 2019 Sales Agreement
Subsequent Events
Maximum aggregate proceeds from offering	$ 50,000,000