Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36554 Ocular Therapeutix, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdic ...

Ocular Therapeutix (NASDAQ:OCUL) Q1 2020 Results Conference Call May 8, 2020 8:30 AM ET Company Participants Donald Notman - CFO Antony Mattessich - President and CEO Dr. Michael Goldstein - Chief Medical Officer Conference Call Participants Joe Catanzaro - Piper Sandler Stacy Ku - Cowen & Co. Jonathan Wolleben - JMP Securities Boobalan Pachaiyappan - H.C. Wainwright Operator Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2020 Ocular Therapeutix Earnings Conference Call. At ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36554 Ocular Therapeutix, Inc. (Exact name of registrant as specified in its charter) Delaware 20-5560161 (St ...

Ocular Therapeutix, Inc. (NASDAQ:OCUL) Q4 2019 Earnings Conference Call March 12, 2020 4:30 PM ET Company Participants Donald Notman - Chief Financial Officer Antony Mattessich - President and Chief Executive Officer Michael Goldstein - Chief Medical Officer Scott Corning - Senior Vice President, Commercial Conference Call Participants Joe Catanzaro - Piper Jaffray Dane Leone - Raymond James & Associates, Inc. Yi Chen - H.C. Wainwright Operator Good afternoon, ladies and gentlemen. Thank you for standing by ...

Table of Contents For the transition period from to Commission file number 001-36554 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Ocular Therapeutix, Inc. (Exact name of registrant as specified in its charter) Delaware 20- 5560161 (State o ...

[FORWARD-LOOKING STATEMENTS](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements on strategy, operations, and product development, noting potential material differences due to risks - This report contains forward-looking statements regarding the company's strategy, future operations, financial position, revenues, costs, and product development plans, including DEXTENZA commercialization, clinical trials (DEXTENZA, OTX-TIC, OTX-TKI), manufacturing, regulatory approvals, and financing needs[8](index=8&type=chunk)[9](index=9&type=chunk)[13](index=13&type=chunk) - Actual results could differ materially from forward-looking statements due to substantial risks and uncertainties, as detailed in the "Risk Factors" section, and the company does not assume any obligation to update these statements[8](index=8&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) [PART I – FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents unaudited financial statements, management's discussion, market risk, and internal controls [Item 1. Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents Ocular Therapeutix's unaudited consolidated financial statements and detailed explanatory notes - The financial statements are unaudited and prepared in conformity with GAAP, with certain disclosures condensed or omitted as per SEC rules for interim financial statements[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Management believes all necessary normal recurring adjustments have been made for a fair statement of financial position, results of operations, and cash flows[36](index=36&type=chunk) - The results for the three and nine months ended September 30, 2019, are not necessarily indicative of the full year ending December 31, 2019[36](index=36&type=chunk) [Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018](index=6&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20September%2030%2C%202019%20and%20December%2031%2C%202018) This section presents the company's consolidated balance sheets as of September 30, 2019, and December 31, 2018 Consolidated Balance Sheets (In thousands) | Metric | Sep 30, 2019 | Dec 31, 2018 | Change (2019 vs 2018) | | :--------------------------------- | :----------- | :----------- | :-------------------- | | **Assets** | | | | | Cash and cash equivalents | $65,414 | $54,062 | +$11,352 | | Total current assets | $69,636 | $56,193 | +$13,443 | | Total assets | $88,710 | $73,043 | +$15,667 | | **Liabilities & Equity** | | | | | Total current liabilities | $11,005 | $9,159 | +$1,846 | | Derivative liability | $9,100 | $0 | +$9,100 | | 2026 convertible notes, net | $23,146 | $0 | +$23,146 | | Total liabilities | $77,409 | $37,168 | +$40,241 | | Total stockholders' equity | $11,301 | $35,875 | -$24,574 | [Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2019 and 2018](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202019%20and%202018) This section details consolidated statements of operations and comprehensive loss for Q3 and 9M 2019 and 2018 Consolidated Statements of Operations and Comprehensive Loss (In thousands) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (YoY) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (YoY) | | :--------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Product revenue, net | $829 | $498 | +$331 | $1,971 | $1,486 | +$485 | | Total revenue, net | $829 | $498 | +$331 | $1,971 | $1,486 | +$485 | | Cost of product revenue | $806 | $115 | +$691 | $1,486 | $348 | +$1,138 | | Research and development | $10,235 | $9,685 | +$550 | $30,966 | $26,657 | +$4,309 | | Selling and marketing | $6,777 | $1,067 | +$5,710 | $17,349 | $2,651 | +$14,698 | | General and administrative | $6,155 | $4,447 | +$1,708 | $16,571 | $13,665 | +$2,906 | | Total costs and operating expenses | $23,973 | $15,314 | +$8,659 | $66,372 | $43,321 | +$23,051 | | Loss from operations | $(23,144) | $(14,816) | $(8,328) | $(64,401) | $(41,835) | $(22,566) | | Change in fair value of derivative liability | $5,717 | $0 | +$5,717 | $7,334 | $0 | +$7,334 | | Net loss and comprehensive loss | $(18,778) | $(15,010) | $(3,768) | $(60,355) | $(42,579) | $(17,776) | | Net loss per share, basic | $(0.40) | $(0.38) | $(0.02) | $(1.37) | $(1.15) | $(0.22) | | Weighted average common shares outstanding, basic | 46,944,536 | 39,017,922 | +7,926,614 | 44,052,470 | 37,111,200 | +6,941,270 | [Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030%2C%202019%20and%202018) This section outlines consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 Consolidated Statements of Cash Flows (In thousands) | Metric | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (YoY) | | :--------------------------------- | :-------------------------- | :-------------------------- | :----------- | | Net loss | $(60,355) | $(42,579) | $(17,776) | | Net cash used in operating activities | $(58,111) | $(35,579) | $(22,532) | | Net cash used in investing activities | $(1,637) | $(1,410) | $(227) | | Net cash provided by financing activities | $66,250 | $52,312 | +$13,938 | | Net increase in cash, cash equivalents and restricted cash | $6,502 | $15,323 | $(8,821) | | Cash, cash equivalents and restricted cash at end of period | $67,178 | $58,475 | +$8,703 | [Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202019%20and%202018) This section presents consolidated statements of stockholders' equity for Q3 and 9M 2019 and 2018 Consolidated Statements of Stockholders' Equity (In thousands) | Metric | Dec 31, 2018 | Mar 31, 2019 | Jun 30, 2019 | Sep 30, 2019 | | :--------------------------------- | :----------- | :----------- | :----------- | :----------- | | Common Stock Shares | 41,518,091 | 42,836,978 | 44,101,583 | 48,079,615 | | Par Value | $4 | $4 | $4 | $5 | | Additional Paid-in Capital | $333,114 | $340,011 | $347,074 | $368,894 | | Accumulated Deficit | $(297,243) | $(314,367) | $(338,820) | $(357,598) | | Total Stockholders' Equity | $35,875 | $25,648 | $8,258 | $11,301 | - The company issued **3,961,643 shares of common stock** in a public offering, net of issuance costs, resulting in **$18,619 thousand** in the three months ended September 30, 2019[23](index=23&type=chunk) - Stock-based compensation expense for the three months ended September 30, 2019, was **$3,169 thousand**[23](index=23&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes on accounting policies, financial instruments, debt, equity, and recent events [Note 1. Nature of the Business and Basis of Presentation](index=11&type=section&id=Note%201.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) This note describes Ocular Therapeutix's biopharmaceutical business, product development, and going concern considerations - Ocular Therapeutix, Inc. is a biopharmaceutical company focused on developing and commercializing innovative eye therapies using its proprietary bioresorbable hydrogel platform technology[28](index=28&type=chunk) - The company's lead product, DEXTENZA (dexamethasone insert) 0.4mg, is FDA-approved, and other product candidates are in clinical stage development[30](index=30&type=chunk) - The company had an accumulated deficit of **$357,598 thousand** as of September 30, 2019, and expects to continue generating operating losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern through Q4 2020 without additional financing[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=13&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's key accounting policies, including revenue recognition, fair value measurements, and new leasing standards - Key accounting policies include revenue recognition (Topic 606), fair value measurements (Level 1, 2, 3 hierarchy), inventory valuation (lower of cost or net realizable value), derivative liability accounting, restricted cash, and net loss per share calculation (two-class method)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk)[59](index=59&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - The company adopted new leasing standards (ASU 2016-02) effective January 1, 2019, recognizing operating lease assets of approximately **$5,300 thousand** and corresponding liabilities of **$8,800 thousand**, with no material impact on the statements of operations[71](index=71&type=chunk) - Product revenue from DEXTENZA and ReSure Sealant is recognized net of variable consideration (discounts, returns, rebates, etc.) when the customer obtains control of the product upon delivery[46](index=46&type=chunk)[47](index=47&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) [Note 3. Fair Value of Financial Assets and Liabilities](index=25&type=section&id=Note%203.%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) This note details the fair value measurements of the company's financial assets and liabilities, including cash equivalents and derivative liability Fair Value Measurements (In thousands) | Asset/Liability | Sep 30, 2019 (Total) | Level 1 | Level 2 | Level 3 | Dec 31, 2018 (Total) | Level 1 | Level 2 | Level 3 | | :-------------------------- | :------------------- | :------ | :------ | :------ | :------------------- | :------ | :------ | :------ | | Cash equivalents: Money market funds | $59,906 | $0 | $59,906 | $0 | $50,906 | $0 | $50,906 | $0 | | Derivative liability | $9,100 | $9,100 | $0 | $0 | $0 | $0 | $0 | $0 | | **Total** | **$69,006** | **$9,100** | **$59,906** | **$0** | **$50,906** | **$0** | **$50,906** | **$0** | - The derivative liability at September 30, 2019, was classified as a Level 3 measurement, with its fair value estimated using a binomial lattice model and Level 3 unobservable inputs like bond yield[40](index=40&type=chunk)[42](index=42&type=chunk) [Note 4. Derivative Liability](index=25&type=section&id=Note%204.%20Derivative%20Liability) This note explains the accounting for the derivative liability embedded in the 2026 Convertible Notes and its fair value estimation - The 2026 Convertible Notes contained an embedded conversion option, bifurcated and accounted for as a freestanding derivative liability, measured at fair value at each reporting period[78](index=78&type=chunk)[93](index=93&type=chunk) - The derivative liability was initially valued at **$16,434 thousand** and decreased by **$7,334 thousand** due to changes in fair value, resulting in a balance of **$9,100 thousand** at September 30, 2019[80](index=80&type=chunk) - Fair value is estimated using a binomial lattice approach, highly sensitive to inputs like stock price (**$3.04** on Sep 30, 2019), expected annual volatility (**88%**), and bond yield (**13.1%**)[79](index=79&type=chunk) [Note 5. Convertible Notes](index=25&type=section&id=Note%205.%20Convertible%20Notes) This note describes the terms, conversion options, and repurchase conditions of the company's 2026 Convertible Notes - On March 1, 2019, the company issued **$37,500 thousand** in 2026 Convertible Notes, accruing interest at an annual rate of **6%**, with an effective annual interest rate of **13.5%** through September 30, 2019[81](index=81&type=chunk)[83](index=83&type=chunk) - Holders can convert notes into common stock at an initial conversion rate of **153.8462 shares per $1,000 principal amount** (equivalent to **$6.50 per share**), subject to a **19.99% beneficial ownership cap**[84](index=84&type=chunk) - The company has the option to settle conversions in cash, common stock, or a combination, and the notes are subject to repurchase or redemption under specific conditions, including a Corporate Transaction or if the stock price meets certain thresholds[85](index=85&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk) [Note 6. Income Taxes](index=29&type=section&id=Note%206.%20Income%20Taxes) This note addresses the company's income tax provisions, valuation allowances, and unrecognized tax benefits - The company did not provide for income taxes in Q3 2019 or 2018, maintaining a full valuation allowance against net deferred tax assets due to the unlikelihood of future benefit realization[95](index=95&type=chunk) - No unrecognized tax benefits, accrued interest, or tax penalties were recorded as of September 30, 2019, or December 31, 2018[96](index=96&type=chunk) [Note 7. Collaboration Agreement](index=29&type=section&id=Note%207.%20Collaboration%20Agreement) This note details the collaboration agreement with Regeneron Pharmaceuticals for developing extended-delivery hydrogel formulations - In October 2016, the company entered a collaboration agreement with Regeneron Pharmaceuticals, Inc. to develop extended-delivery hydrogel formulations with Regeneron's VEGF-targeting compounds for retinal diseases[97](index=97&type=chunk)[99](index=99&type=chunk) - Regeneron has an option for an exclusive worldwide license, with a **$10,000 thousand** payment upon exercise, and the company is eligible for up to **$145,000 thousand** in development/regulatory milestones, **$100,000 thousand** upon first commercial sale, and tiered royalties[100](index=100&type=chunk)[102](index=102&type=chunk) - As of September 30, 2019, the option has not been exercised, and discussions are ongoing regarding an alternative formulation after the initial proposed formulation was deemed not final[101](index=101&type=chunk)[103](index=103&type=chunk) [Note 8. Notes Payable](index=31&type=section&id=Note%208.%20Notes%20Payable) This note outlines the terms of the company's Credit Facility, including borrowing capacity, interest rates, and collateral - The company has a Credit Facility with a total borrowing capacity of **$25,000 thousand**, fully drawn as of September 30, 2019, with interest-only payments until December 2020 and principal payments starting January 2021[104](index=104&type=chunk)[105](index=105&type=chunk) - The interest rate is LIBOR base rate (**2.00% floor**) plus **7.25%** (**9.76%** on amendment date), plus a **3.5% exit fee** (**$875 thousand** for **$25,000 thousand** borrowings)[106](index=106&type=chunk) - An August 2019 amendment removed the financial covenant requiring a minimum of **$5,000 thousand** cash on hand, and the debt is collateralized by substantially all company assets, including intellectual property[108](index=108&type=chunk)[109](index=109&type=chunk) Notes Payable Summary (In thousands) | Metric | Sep 30, 2019 | Dec 31, 2018 | | :------------------ | :----------- | :----------- | | Borrowings outstanding | $25,000 | $25,000 | | Accrued exit fee | $136 | $5 | | Unamortized discount | $(184) | $(217) | | **Total** | **$24,952** | **$24,788** | [Note 9. Common Stock](index=33&type=section&id=Note%209.%20Common%20Stock) This note details common stock issuances, including public offerings and sales agreements, and their net proceeds - In Q3 2019, the company sold **3,961,643 shares of common stock** under the 2019 Sales Agreement, generating net proceeds of approximately **$18,618 thousand**[112](index=112&type=chunk) - From inception to September 30, 2019, the company sold **5,142,010 shares** under the 2019 Sales Agreement, yielding net proceeds of approximately **$23,692 thousand**[112](index=112&type=chunk) - The 2016 Sales Agreement was terminated on February 28, 2019, after selling **6,330,222 shares** for net proceeds of approximately **$38,381 thousand** through March 31, 2019[114](index=114&type=chunk) [Note 10. Net Loss Per Share](index=35&type=section&id=Note%2010.%20Net%20Loss%20Per%20Share) This note presents the calculation of basic and diluted net loss per share, including adjustments for convertible notes and anti-dilutive items Net Loss Per Share (In thousands, except share and per share data) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to common stockholders | $(18,778) | $(15,010) | $(60,355) | $(42,579) | | Weighted average common shares outstanding, basic | 46,944,536 | 39,017,922 | 44,052,470 | 37,111,200 | | Net loss per share, basic | $(0.40) | $(0.38) | $(1.37) | $(1.15) | | Net loss attributable to common stockholders, diluted | $(23,497) | $(15,010) | $(60,355) | $(42,579) | | Weighted average common shares outstanding, diluted | 52,713,768 | 39,017,922 | 44,052,470 | 37,111,200 | | Net loss per share, diluted | $(0.45) | $(0.38) | $(1.37) | $(1.15) | - For the three months ended September 30, 2019, diluted EPS was **$(0.45)**, reflecting adjustments for interest expense on 2026 Convertible Notes and change in fair value of derivative liability, and including **5,769,232 shares** issuable upon conversion of 2026 Convertible Notes[117](index=117&type=chunk) - Options to purchase common stock (**7,621,722**) and warrants (**18,939**) were excluded from diluted EPS calculation for Q3 2019 and 9M 2019/2018 due to their anti-dilutive impact[118](index=118&type=chunk) [Note 11. Stock-Based Awards](index=36&type=section&id=Note%2011.%20Stock-Based%20Awards) This note describes the company's stock incentive plans, available shares, and stock-based compensation expense - The 2014 Stock Incentive Plan increased by **1,659,218 shares** on January 1, 2019, with **893,066 shares** remaining available for issuance as of September 30, 2019[119](index=119&type=chunk) - The 2014 Employee Stock Purchase Plan (ESPP) increased by **207,402 shares** on January 1, 2019, with **524,674 shares** remaining available as of September 30, 2019[120](index=120&type=chunk) - Stock-based compensation expense for the nine months ended September 30, 2019, totaled **$6,806 thousand**, with **$12,109 thousand** of unrecognized cost remaining, expected to be recognized over **2.5 years**[123](index=123&type=chunk) [Note 12. Commitments and Contingencies](index=38&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) This note details the company's license agreements, legal proceedings, and other contractual commitments - The company has a license agreement with Incept LLC for intellectual property rights related to its bioresorbable hydrogel technology, expanded in September 2018 to include acute post-surgical pain and ENT conditions[125](index=125&type=chunk)[129](index=129&type=chunk) - Royalties are payable to Incept: low single-digit on Ophthalmic Field of Use (Original IP), mid-single-digit on Additional Field of Use (Original IP), and low single-digit on Incept IP or Joint IP in drug delivery[131](index=131&type=chunk) - The company is involved in multiple securities class action and shareholder derivative lawsuits, which were consolidated and dismissed in April 2019 (class action, appealed) and stayed (derivative actions). The SEC concluded its investigation without recommending enforcement action[142](index=142&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) [Note 13. Related Party Transactions](index=48&type=section&id=Note%2013.%20Related%20Party%20Transactions) This note discloses transactions with related parties, specifically legal services provided by McCarter English LLP - The company engaged McCarter English LLP for legal services, incurring fees of **$209 thousand** and **$672 thousand** for the three and nine months ended September 30, 2019, respectively[155](index=155&type=chunk) [Note 14. Leases](index=48&type=section&id=Note%2014.%20Leases) This note outlines the company's operating lease arrangements for real estate and equipment, including new lease agreements and associated costs - The company leases real estate and equipment, with remaining lease terms from less than **1 year to 9 years**, all qualifying as operating leases[156](index=156&type=chunk) - On April 4, 2019, a new five-year non-cancelable lease for **30,036 sq ft** of office space commenced, resulting in an operating lease asset and liability of **$2,044 thousand**[157](index=157&type=chunk) Operating Lease Costs (In thousands) | Expense Category | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2019 | | :----------------------- | :-------------------------- | :-------------------------- | | Research and development | $423 | $1,215 | | Selling and marketing | $79 | $183 | | General and administrative | $89 | $226 | | **Total Operating Lease Costs** | **$591** | **$1,624** | - The weighted average remaining lease term is **6.7 years**, and the weighted average discount rate is **13.55%** as of September 30, 2019[161](index=161&type=chunk) [Note 15. Subsequent Events](index=50&type=section&id=Note%2015.%20Subsequent%20Events) This note reports on significant events occurring after the reporting period, including a new stock incentive plan and operational restructuring - On October 29, 2019, the 2019 Inducement Stock Incentive Plan was approved, authorizing **500,000 shares** for inducement awards to new employees[162](index=162&type=chunk) - On November 6, 2019, the Board approved an operational restructuring, reducing headcount by approximately **22%** (**55 employees**) and eliminating **31 vacant positions**, with estimated costs of **$0.7 million** and expected annualized savings of **$11 million**, plus **$14 million** in one-time program deferrals[163](index=163&type=chunk)[256](index=256&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition, operations, business developments, critical accounting policies, and liquidity - The company is a biopharmaceutical company focused on innovative eye therapies using its proprietary bioresorbable hydrogel platform technology[166](index=166&type=chunk) - DEXTENZA was commercially launched in July 2019 for post-surgical ocular inflammation and pain, and the company has several product candidates in clinical and preclinical development for various eye conditions[168](index=168&type=chunk)[169](index=169&type=chunk) - The company incurred significant operating losses (**$18.8 million** for Q3 2019, **$60.4 million** for 9M 2019) and had an accumulated deficit of **$357.6 million** as of Sep 30, 2019, raising substantial doubt about its ability to continue as a going concern[204](index=204&type=chunk)[257](index=257&type=chunk) [Overview](index=51&type=section&id=Overview) This section provides an overview of Ocular Therapeutix's business, proprietary technology, key products, and collaboration agreements - Ocular Therapeutix utilizes a proprietary bioresorbable hydrogel platform for local programmed-release drug delivery to treat front and back-of-the-eye conditions[166](index=166&type=chunk)[167](index=167&type=chunk) - Key products/candidates include DEXTENZA (FDA-approved for post-surgical ocular pain/inflammation, Phase 3 for allergic conjunctivitis), OTX-TP (glaucoma/ocular hypertension), OTX-TIC (glaucoma/ocular hypertension), OTX-TKI (wet AMD), and ReSure Sealant[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - The company has a collaboration with Regeneron for an extended-delivery aflibercept formulation (Eylea) for retinal diseases[169](index=169&type=chunk) [Inflammation and Pain after Ocular Surgery (DEXTENZA)](index=51&type=section&id=Inflammation%20and%20Pain%20after%20Ocular%20Surgery%20%28DEXTENZA%29) This section details DEXTENZA's FDA approvals, commercial launch, reimbursement codes, and ongoing clinical trials for allergic conjunctivitis - DEXTENZA (dexamethasone ophthalmic insert) 0.4mg was FDA-approved in November 2018 for post-surgical ocular pain and in June 2019 for post-surgical ocular inflammation, commercially launched July 1, 2019[168](index=168&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - The company expanded its sales force to **30 Key Account Managers (KAMs)** and secured C-code (effective July 1, 2019) and permanent J-code (effective October 1, 2019) for DEXTENZA reimbursement[172](index=172&type=chunk)[173](index=173&type=chunk) - A pivotal Phase 3 clinical trial for DEXTENZA in allergic conjunctivitis began dosing in Q3 2019, with topline data anticipated in H1 2020[175](index=175&type=chunk) [Glaucoma Programs](index=53&type=section&id=Glaucoma%20Programs) This section discusses the development status of OTX-TP and OTX-TIC for glaucoma and ocular hypertension, including clinical trial results and future plans - OTX-TP (intracanalicular travoprost insert) aims to reduce intraocular pressure (IOP) for up to **90 days** in glaucoma/ocular hypertension patients, addressing poor adherence to daily eye drops[179](index=179&type=chunk)[180](index=180&type=chunk) - A Phase 3 trial for OTX-TP did not achieve statistical significance at all nine primary efficacy endpoints, though IOP reduction was greater than placebo at eight of nine time points. The company does not intend to initiate a second Phase 3 trial without a collaborative partner[181](index=181&type=chunk)[186](index=186&type=chunk) OTX-TP Phase 3 Trial: IOP Reduction (Change from Baseline, mm Hg) | Diurnal Time points | 2 Week (OTX-TP) | 2 Week (Placebo) | 2 Week (p value) | 6 Week (OTX-TP) | 6 Week (Placebo) | 6 Week (p value) | 12 Week (OTX-TP) | 12 Week (Placebo) | 12 Week (p value) | | :------------------ | :-------------- | :--------------- | :--------------- | :-------------- | :--------------- | :--------------- | :--------------- | :--------------- | :--------------- | | 8:00 AM | -5.72 | -3.88 | <.0001 | -4.81 | -4.01 | 0.0181 | -3.91 | -3.52 | 0.2521 | | 10:00 AM | -4.92 | -3.16 | <.0001 | -4.03 | -3.23 | 0.0077 | -3.34 | -2.63 | 0.0234 | | 4:00 PM | -5.22 | -3.18 | <.0001 | -4.16 | -3.14 | 0.0004 | -3.27 | -2.60 | 0.0310 | - OTX-TIC (intracameral travoprost implant) Phase 1 trial showed IOP lowering for up to **thirteen months** with a single implant, with biodegradation in **five to seven months**. Modifications are being explored to address low-grade inflammation and peripheral anterior synechiae[187](index=187&type=chunk) [Back-of-the-Eye Programs](index=57&type=section&id=Back-of-the-Eye%20Programs) This section outlines the company's intravitreal hydrogel formulations for extended delivery of anti-angiogenic drugs for retinal diseases like wet AMD - The company is developing intravitreal hydrogel formulations for extended delivery of anti-angiogenic drugs (protein-based anti-VEGF, small molecule TKIs) for retinal diseases like wet AMD, aiming for **4-9 month delivery**[188](index=188&type=chunk) - OTX-TKI (intravitreal tyrosine kinase inhibitor ophthalmic implant) Phase 1 trial in Australia is dosing a second, higher dose cohort after the first cohort showed no safety concerns[189](index=189&type=chunk)[191](index=191&type=chunk) - Collaboration with Regeneron (OTX-IVT) for extended-delivery aflibercept (Eylea) is ongoing, with discussions for an alternative formulation after the initial one was deemed not final[192](index=192&type=chunk)[195](index=195&type=chunk) [ReSure® Sealant](index=59&type=section&id=ReSure%C2%AE%20Sealant) This section provides an update on ReSure Sealant's commercial status, FDA warning letter, and plans to address post-approval study requirements - ReSure Sealant, an FDA-approved hydrogel ophthalmic wound sealant for cataract surgery, was commercially launched in 2014 but has generated limited revenues[196](index=196&type=chunk)[215](index=215&type=chunk) - The company received an FDA warning letter in October 2018 regarding lack of progress on a required post-approval Device Exposure Registry Study. A proposed retrospective registry study using IRIS Registry data is being finalized to address this[200](index=200&type=chunk)[201](index=201&type=chunk) - ReSure Sealant remains commercially available but with no sales support, and only limited sales are anticipated for 2019[201](index=201&type=chunk) [Additional Potential Areas for Growth](index=61&type=section&id=Additional%20Potential%20Areas%20for%20Growth) This section explores the company's hydrogel platform technology for applications beyond ophthalmology, including acute post-surgical pain and ENT conditions - The company is exploring the use of its hydrogel platform technology in other areas of the body, including wound inlays, sinus and ear inserts, and subcutaneous/intra-articular injections[203](index=203&type=chunk) - A September 2018 amended license agreement with Incept LLC expanded intellectual property rights to include products for acute post-surgical pain and ear, nose, and throat (ENT) diseases[203](index=203&type=chunk) [Financial Position](index=61&type=section&id=Financial%20Position) This section reviews the company's financial position, including accumulated deficit, operating losses, and liquidity outlook, noting going concern risks - The company has incurred significant operating losses since inception, with a net loss of **$18.8 million** for Q3 2019 and **$60.4 million** for 9M 2019, leading to an accumulated deficit of **$357.6 million** as of September 30, 2019[204](index=204&type=chunk)[257](index=257&type=chunk) - Total costs and operating expenses were **$24.0 million** for Q3 2019 and **$66.4 million** for 9M 2019, including non-cash stock-based compensation and depreciation[205](index=205&type=chunk) - Existing cash and cash equivalents (**$65.4 million** as of Sep 30, 2019), anticipated DEXTENZA sales, and expected cost savings from the November 2019 restructuring are projected to fund operations through Q4 2020, but this estimate is subject to uncertainty and raises substantial doubt about going concern[213](index=213&type=chunk)[266](index=266&type=chunk) [Financial Operations Overview](index=65&type=section&id=Financial%20Operations%20Overview) This section provides an overview of the company's revenue, cost of product revenue, and operating expenses for the reporting periods [Revenue](index=65&type=section&id=Revenue) This section discusses the company's limited revenue generation from DEXTENZA and ReSure Sealant sales and future revenue dependencies - The company generated limited revenue from DEXTENZA and ReSure Sealant sales, with DEXTENZA commercial shipments beginning in June 2019[215](index=215&type=chunk) - Future revenue generation depends on successful commercialization of DEXTENZA for additional indications and other product candidates, or new collaboration agreements[215](index=215&type=chunk) [Cost of Product Revenue](index=65&type=section&id=Cost%20of%20Product%20Revenue) This section details the components of the cost of product revenue, primarily for DEXTENZA, including materials, labor, and manufacturing overhead - Cost of product revenue primarily includes direct materials, direct labor (salaries, benefits, stock-based compensation), manufacturing overhead, transportation, and cost of scrap material for DEXTENZA[216](index=216&type=chunk) [Research and Development Expenses](index=67&type=section&id=Research%20and%20Development%20Expenses) This section outlines R&D expenses by program, including employee costs, clinical trials, and expected reductions from restructuring - R&D expenses consist of employee-related costs, clinical trial expenses, regulatory activities, manufacturing capabilities, and ongoing research for hydrogel technology[216](index=216&type=chunk)[221](index=221&type=chunk) Research and Development Expenses by Program (In thousands) | Program | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | ReSure Sealant | $57 | $58 | $130 | $96 | | DEXTENZA for post-surgical ocular inflammation and pain | $274 | $458 | $789 | $825 | | DEXTENZA for allergic conjunctivitis | $576 | $0 | $691 | $20 | | OTX-TP for glaucoma and ocular hypertension | $252 | $1,445 | $1,410 | $4,181 | | OTX-TIC for glaucoma and ocular hypertension | $181 | $0 | $480 | $0 | | OTX-TKI for Wet AMD | $246 | $0 | $424 | $0 | | Preclinical programs | $421 | $0 | $1,552 | $0 | | Unallocated expenses | $8,227 | $7,724 | $25,489 | $21,535 | | **Total R&D Expenses** | **$10,234** | **$9,685** | **$30,965** | **$26,657** | - R&D expenses are expected to decrease in 2020 due to the November 2019 operational restructuring, which will delay certain clinical programs to prioritize DEXTENZA, OTX-TIC, and OTX-TKI[220](index=220&type=chunk) [Selling and Marketing Expenses](index=69&type=section&id=Selling%20and%20Marketing%20Expenses) This section analyzes the significant increase in selling and marketing expenses driven by the DEXTENZA commercial launch - Selling and marketing expenses increased significantly by **$5.7 million** (QoQ) and **$14.7 million** (YoY) due to the commercial launch of DEXTENZA, including increased personnel costs, professional fees, and facility-related costs[239](index=239&type=chunk)[251](index=251&type=chunk) Selling and Marketing Expenses (In thousands) | Expense Category | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (YoY) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (YoY) | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Personnel related (incl. stock-based comp) | $3,607 | $394 | +$3,213 | $8,542 | $1,185 | +$7,357 | | Professional fees | $2,345 | $562 | +$1,783 | $6,729 | $1,104 | +$5,625 | | Facility related and other | $825 | $111 | +$714 | $2,078 | $362 | +$1,716 | | **Total Selling and Marketing Expenses** | **$6,777** | **$1,067** | **+$5,710** | **$17,349** | **$2,651** | **+$14,698** | [General and Administrative Expenses](index=69&type=section&id=General%20and%20Administrative%20Expenses) This section details the increase in general and administrative expenses, primarily due to personnel and facility-related costs - General and administrative expenses increased by **$1.7 million** (QoQ) and **$2.9 million** (YoY), primarily due to higher personnel costs (including stock-based compensation) and facility-related costs[242](index=242&type=chunk)[252](index=252&type=chunk) General and Administrative Expenses (In thousands) | Expense Category | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (YoY) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (YoY) | | :----------------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Personnel related (incl. stock-based comp) | $3,790 | $2,068 | +$1,722 | $8,474 | $6,140 | +$2,334 | | Professional fees | $1,587 | $2,044 | $(457) | $6,174 | $6,389 | $(215) | | Facility related and other | $778 | $335 | +$443 | $1,923 | $1,136 | +$787 | | **Total General and Administrative Expenses** | **$6,155** | **$4,447** | **+$1,708** | **$16,571** | **$13,665** | **+$2,906** | [Other Income (Expense)](index=69&type=section&id=Other%20Income%20%28Expense%29) This section explains the change in other income (expense), primarily due to the fair value adjustment of derivative liability and interest expense - Other income, net, was **$4.4 million** for Q3 2019 (vs. **$0.2 million** expense in Q3 2018) and **$4.0 million** for 9M 2019 (vs. **$0.7 million** expense in 9M 2018), primarily driven by a **$5.7 million** (QoQ) and **$7.3 million** (YoY) gain from the change in fair value of derivative liability[243](index=243&type=chunk)[253](index=253&type=chunk) - This gain was partially offset by higher interest expense of **$1.2 million** (QoQ) and **$2.9 million** (YoY) associated with the Credit Facility and 2026 Convertible Notes[243](index=243&type=chunk)[253](index=253&type=chunk) - The change in fair value of derivative liability is expected to fluctuate based on changes in underlying assumptions, primarily common stock price[243](index=243&type=chunk)[255](index=255&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=71&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section highlights critical accounting policies, including revenue recognition and derivative liability, which involve significant judgment and estimates - The company's critical accounting policies include revenue recognition and derivative liability, which involve significant judgment and complexity in making estimates and assumptions[230](index=230&type=chunk)[233](index=233&type=chunk) - The fair value of the embedded derivative liability from the 2026 Convertible Notes is a critical accounting policy, estimated using a binomial lattice approach with highly sensitive inputs like stock price, volatility, and bond yield[230](index=230&type=chunk)[231](index=231&type=chunk) [Results of Operations](index=72&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial results for the three and nine months ended September 30, 2019 and 2018 [Comparison of the Three Months Ended September 30, 2019 and 2018](index=72&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030%2C%202019%20and%202018) This section compares the company's financial performance for the three months ended September 30, 2019 and 2018, highlighting key revenue and expense changes Results of Operations - Three Months Ended September 30 (In thousands) | Metric | Sep 30, 2019 | Sep 30, 2018 | Increase (Decrease) | | :--------------------------------- | :----------- | :----------- | :------------------ | | Product revenue, net | $829 | $498 | $331 | | Total revenue | $829 | $498 | $331 | | Cost of product revenue | $806 | $115 | $691 | | Research and development | $10,235 | $9,685 | $550 | | Selling and marketing | $6,777 | $1,067 | $5,710 | | General and administrative | $6,155 | $4,447 | $1,708 | | Total costs and operating expenses | $23,973 | $15,314 | $8,659 | | Loss from operations | $(23,144) | $(14,816) | $(8,328) | | Change in fair value of derivative liability | $5,717 | $0 | $5,717 | | Net loss | $(18,778) | $(15,010) | $(3,768) | - Product revenue increased by **$0.3 million**, primarily due to DEXTENZA commercial shipments starting in June 2019[235](index=235&type=chunk) - Selling and marketing expenses saw the largest increase, up **$5.7 million**, driven by DEXTENZA launch support[239](index=239&type=chunk) [Comparison of the Nine months Ended September 30, 2019 and 2018](index=76&type=section&id=Comparison%20of%20the%20Nine%20months%20Ended%20September%2030%2C%202019%20and%202018) This section compares the company's financial performance for the nine months ended September 30, 2019 and 2018, focusing on revenue and operating expense trends Results of Operations - Nine Months Ended September 30 (In thousands) | Metric | Sep 30, 2019 | Sep 30, 2018 | Increase (Decrease) | | :--------------------------------- | :----------- | :----------- | :------------------ | | Product revenue, net | $1,971 | $1,486 | $485 | | Total revenue, net | $1,971 | $1,486 | $485 | | Cost of product revenue | $1,486 | $348 | $1,138 | | Research and development | $30,966 | $26,657 | $4,309 | | Selling and marketing | $17,349 | $2,651 | $14,698 | | General and administrative | $16,571 | $13,665 | $2,906 | | Total costs and operating expenses | $66,372 | $43,321 | $23,051 | | Loss from operations | $(64,401) | $(41,835) | $(22,566) | | Change in fair value of derivative liability | $7,334 | $0 | $7,334 | | Net loss | $(60,355) | $(42,579) | $(17,776) | - Product revenue increased by **$0.5 million**, driven by DEXTENZA commercial shipments starting in June 2019[246](index=246&type=chunk) - Selling and marketing expenses surged by **$14.7 million**, primarily due to the addition of Key Account Managers (KAMs) to support the DEXTENZA launch[251](index=251&type=chunk) [Operational Restructuring – November 2019](index=80&type=section&id=Operational%20Restructuring%20%E2%80%93%20November%202019) This section details the November 2019 operational restructuring, including workforce reductions, cost savings, and program prioritization - On November 6, 2019, the company approved an operational restructuring to reduce expenses and prioritize resources, focusing on DEXTENZA commercialization and ongoing clinical trials (DEXTENZA, OTX-TIC, OTX-TKI)[256](index=256&type=chunk) - The restructuring includes a **22% workforce reduction** (**55 employees**) and elimination of **31 vacant positions**, with estimated costs of **$0.7 million** and expected annualized savings of **$11 million**, plus **$14 million** in one-time program deferrals[256](index=256&type=chunk) [Liquidity and Capital Resources](index=80&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's liquidity, capital resources, cash flow activities, and future funding requirements, addressing going concern issues - The company has incurred significant operating losses and had an accumulated deficit of **$357.6 million** as of September 30, 2019[257](index=257&type=chunk) - Operations are financed primarily through private placements of preferred stock, public offerings of common stock, convertible notes, and credit facilities[259](index=259&type=chunk) - As of September 30, 2019, the company had **$65.4 million** in cash and cash equivalents, **$25.0 million** in outstanding debt, and **$37.5 million** in 2026 convertible notes[266](index=266&type=chunk) - The company believes existing cash, anticipated DEXTENZA sales, and restructuring savings will fund operations through Q4 2020, but this estimate is subject to uncertainty and raises substantial doubt about its ability to continue as a going concern[266](index=266&type=chunk)[277](index=277&type=chunk)[285](index=285&type=chunk) [Cash Flows](index=82&type=section&id=Cash%20Flows) This section summarizes the company's cash flow activities from operations, investing, and financing for the nine months ended September 30, 2019 and 2018 Cash Flow Summary (In thousands) | Activity | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Cash used in operating activities | $(58,111) | $(35,579) | | Cash used in investing activities | $(1,637) | $(1,410) | | Cash provided by financing activities | $66,250 | $52,312 | | Net increase in cash and cash equivalents | $6,502 | $15,323 | - Net cash used in operating activities increased to **$58.1 million** (9M 2019) from **$35.6 million** (9M 2018), primarily due to net losses and changes in operating assets/liabilities, partially offset by non-cash items[267](index=267&type=chunk)[270](index=270&type=chunk) - Net cash provided by financing activities was **$66.3 million** (9M 2019), mainly from 2026 Convertible Notes (**$37.3 million**) and common stock offerings (**$28.6 million**)[272](index=272&type=chunk) [Funding Requirements](index=84&type=section&id=Funding%20Requirements) This section outlines the company's expected substantial expenses, future capital needs, and factors influencing funding requirements, including going concern risks - The company expects to incur substantial expenses for DEXTENZA commercialization, clinical trials (DEXTENZA, OTX-TIC, OTX-TKI), R&D, and expanding sales/marketing capabilities[274](index=274&type=chunk) - Existing cash (**$65.4 million** as of Sep 30, 2019), anticipated DEXTENZA sales, and restructuring savings are expected to fund operations through Q4 2020, but additional funding will be required[277](index=277&type=chunk)[285](index=285&type=chunk) - Future capital requirements depend on factors like DEXTENZA sales, regulatory review outcomes, manufacturing costs, R&D progress, collaboration milestones, and legal proceedings[278](index=278&type=chunk)[282](index=282&type=chunk) - The company's accumulated deficit and history of losses raise substantial doubt about its ability to continue as a going concern, necessitating additional capital through equity, debt, or collaborations[285](index=285&type=chunk)[281](index=281&type=chunk) [Contractual Obligations and Commitments](index=90&type=section&id=Contractual%20Obligations%20and%20Commitments) This section details the company's contractual obligations, including operating leases, purchase commitments, and debt obligations as of September 30, 2019 Contractual Obligations at September 30, 2019 (In thousands) | Obligation Type | Total | Less Than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | | :-------------------------- | :----------- | :--------------- | :----------- | :----------- | :---------------- | | Operating lease commitments | $15,799 | $2,421 | $4,999 | $4,213 | $4,166 | | Purchase commitments | $3,395 | $2,125 | $1,189 | $81 | $0 | | Debt obligations including interest | $32,788 | $2,484 | $18,250 | $12,054 | $0 | | 2026 Convertible Notes | $53,469 | $0 | $0 | $0 | $53,469 | | **Total** | **$105,451** | **$7,030** | **$24,438** | **$16,348** | **$57,635** | - Operating lease commitments include office, laboratory, and manufacturing space, with a new sublease for 24 Crosby Drive commencing April 2019[288](index=288&type=chunk)[292](index=292&type=chunk) - Debt obligations include the Credit Facility (**$25.0 million** principal) and 2026 Convertible Notes (**$37.5 million** principal), with specific repayment schedules and interest[298](index=298&type=chunk)[302](index=302&type=chunk) [Off-Balance Sheet Arrangements](index=96&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements during the reported periods - The company did not have any off-balance sheet arrangements during the periods presented[308](index=308&type=chunk) [Recently Issued Accounting Pronouncements](index=96&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section refers to Note 2 for information on recently issued accounting pronouncements relevant to the company - Information on new accounting pronouncements is included in Note 2 – Summary of Significant Accounting Policies[309](index=309&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=96&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate sensitivity, and its investment policies aimed at liquidity and capital preservation - The company is exposed to market risk from changes in interest rates, with **$65.4 million** in cash and cash equivalents (money market funds) as of September 30, 2019[310](index=310&type=chunk) - Investment policies prioritize high-quality issuers, limited individual exposure, and adequate liquidity. An immediate **100 basis point** change in interest rates would not materially affect the fair market value of the short-term investment portfolio[310](index=310&type=chunk) [Item 4. Controls and Procedures](index=96&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2019[311](index=311&type=chunk)[313](index=313&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2019[314](index=314&type=chunk) [PART II – OTHER INFORMATION](index=99&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part includes information on legal proceedings, risk factors, equity sales, and other required disclosures [Item 1. Legal Proceedings](index=99&type=section&id=Item%201.%20Legal%20Proceedings) This section provides an update on the company's ongoing legal proceedings, including securities class actions and shareholder derivative lawsuits, and the conclusion of an SEC investigation - The company is a defendant in multiple securities class action lawsuits alleging false/misleading statements regarding DEXTENZA and manufacturing operations, which were consolidated and dismissed in April 2019, but the dismissal has been appealed[317](index=317&type=chunk)[321](index=321&type=chunk) - Several shareholder derivative lawsuits have been filed against current/former officers and directors, alleging breach of fiduciary duties, unjust enrichment, and waste of corporate assets. These actions are consolidated and stayed pending the securities class action appeal[323](index=323&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk)[331](index=331&type=chunk) - The SEC concluded its investigation into DEXTENZA-related communications and investor conferences in May 2019, notifying the company that no enforcement action would be recommended[333](index=333&type=chunk) [Item 1A. Risk Factors](index=103&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks affecting the company's business, financial condition, and growth, covering financial, product, manufacturing, and regulatory aspects - The company has incurred significant losses and expects to continue doing so, with an accumulated deficit of **$357.6 million** as of September 30, 2019, raising substantial doubt about its ability to achieve or maintain profitability and continue as a going concern[336](index=336&type=chunk)[342](index=342&type=chunk)[349](index=349&type=chunk) - Dependence on DEXTENZA and product candidates means clinical trial failures, regulatory delays, or lack of market acceptance could severely harm the business[361](index=361&type=chunk)[362](index=362&type=chunk)[367](index=367&type=chunk) - Manufacturing risks include the need to upgrade/expand facilities, compliance with cGMP, potential defects, and reliance on sole-source suppliers, which could impact product availability and costs[402](index=402&type=chunk)[405](index=405&type=chunk)[407](index=407&type=chunk)[413](index=413&type=chunk) - Commercialization risks include DEXTENZA and ReSure Sealant failing to achieve market acceptance, intense competition (especially from generics), unfavorable pricing/reimbursement policies, and product liability lawsuits[416](index=416&type=chunk)[417](index=417&type=chunk)[429](index=429&type=chunk)[430](index=430&type=chunk)[437](index=437&type=chunk)[445](index=445&type=chunk) - Intellectual property risks involve challenges in obtaining/maintaining patent protection, potential infringement claims, and reliance on licensors (Incept) for patent prosecution and enforcement[469](index=469&type=chunk)[471](index=471&type=chunk)[487](index=487&type=chunk)[488](index=488&type=chunk)[493](index=493&type=chunk) - Regulatory risks include the expensive and uncertain approval process, post-marketing restrictions, compliance with healthcare fraud/abuse laws, and the impact of healthcare reform (ACA, Cures Act, drug pricing initiatives)[500](index=500&type=chunk)[507](index=507&type=chunk)[514](index=514&type=chunk)[522](index=522&type=chunk)[532](index=532&type=chunk)[535](index=535&type=chunk)[547](index=547&type=chunk) - Employee-related risks include dependence on key personnel, difficulties managing growth, and potential employee misconduct[569](index=569&type=chunk)[571](index=571&type=chunk)[574](index=574&type=chunk)[575](index=575&type=chunk) - Common stock risks include control by executive officers/directors, anti-takeover provisions, stock price volatility, and potential dilution from future equity sales[578](index=578&type=chunk)[579](index=579&type=chunk)[587](index=587&type=chunk)[591](index=591&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=195&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section reports on recent unregistered sales of equity securities, specifically inducement stock option awards granted to new employees outside of the main stock incentive plan - On July 9, 2019, a non-statutory stock option to purchase **60,000 shares** was granted to the Senior VP, Head of Business Development, at an exercise price of **$5.13 per share**, vesting over **four years**[608](index=608&type=chunk) - On October 30, 2019, **54,000 shares** were granted to nine newly-hired employees under the 2019 Inducement Stock Incentive Plan, with an exercise price of **$3.24 per share**, vesting over **four years**[611](index=611&type=chunk) - These grants were made as inducements for employment in accordance with Nasdaq Listing Rule 5635(c)(4) and are anticipated to be registered on a Form S-8[610](index=610&type=chunk)[611](index=611&type=chunk) [Item 5. Other Information](index=197&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report under this item - No other information is reported under this item[612](index=612&type=chunk) [Item 6. Exhibits](index=198&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including inducement stock plans, certifications, and XBRL taxonomy documents - Exhibits include the 2019 Inducement Stock Incentive Plan, Form of Inducement Nonstatutory Stock Option Agreement, certifications from principal executive and financial officers (pursuant to Rules 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350), and XBRL taxonomy documents[615](index=615&type=chunk)[618](index=618&type=chunk) [SIGNATURES](index=200&type=section&id=SIGNATURES) This section contains the official signatures for the Quarterly Report on Form 10-Q - The report was signed on November 12, 2019, by Donald Notman, Chief Financial Officer (Principal Financial and Accounting Officer) of Ocular Therapeutix, Inc[622](index=622&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36554 Ocular Therapeutix, Inc. (Exact name of registrant as specified in its charter) Delaware 20-5560161 (Sta ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36554 Ocular Therapeutix, Inc. (Exact name of registrant as specified in its charter) Delaware 20-5560161 (St ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-36554 Ocular Therapeutix, Inc. (Exact name of registrant as specified in its charter) Delaware 20- 5560161 (State o ...