Oculis AG(OCS) - 2024 Q3 - Quarterly Report

Statements of Financial Position Oculis Holding AG's total assets increased to CHF 125.6 million as of September 30, 2024, from CHF 114.4 million at December 31, 2023, driven by growth in current assets, particularly short-term financial assets. Total equity also saw a slight increase, while total liabilities significantly rose, mainly due to accrued expenses and warrant liabilities Financial Position Summary | Metric | Sep 30, 2024 (CHF thousands) | Dec 31, 2023 (CHF thousands) | Change (CHF thousands) | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------- | | Total Assets | 125,608 | 114,353 | +11,255 | | Non-current assets | 14,117 | 13,338 | +779 | | Current assets | 111,491 | 101,015 | +10,476 | | Short-term financial assets | 69,841 | 53,324 | +16,517 | | Cash and cash equivalents | 35,632 | 38,327 | -2,695 | | Total Equity | 95,228 | 93,728 | +1,500 | | Total Liabilities | 30,380 | 20,625 | +9,755 | | Current liabilities | 27,717 | 19,088 | +8,629 | | Warrant liabilities | 7,807 | 5,370 | +2,437 | | Accrued expenses and other payables | 14,704 | 5,948 | +8,756 | | Trade payables | 4,892 | 7,596 | -2,704 | | Long-term lease liabilities | 929 | 431 | +498 | | Defined benefit pension liabilities | 1,734 | 728 | +1,006 | | Accumulated losses | (256,902) | (199,780) | -57,122 | | Share premium | 340,645 | 288,162 | +52,483 | | Reserve for share-based payment | 13,319 | 6,379 | +6,940 | | Share capital | 429 | 366 | +63 | | Right-of-use assets | 1,386 | 755 | +631 | | Intangible assets | 12,206 | 12,206 | 0 | | Property and equipment, net | 366 | 288 | +78 | | Other non-current assets | 159 | 89 | +70 | | Other current assets | 4,450 | 8,488 | -4,038 | | Accrued income | 1,568 | 876 | +692 | | Treasury shares | (10) | - | -10 | | Cumulative translation adjustments | (334) | (327) | -7 | | Actuarial loss on post-employment benefit obligations | (1,919) | (1,072) | -847 | | Long-term payables | - | 378 | -378 | | Short-term lease liabilities | 314 | 174 | +140 | | Total non-current liabilities | 2,663 | 1,537 | +1,126 | - Total Assets increased by CHF 11.26 million, primarily driven by a CHF 16.52 million increase in short-term financial assets[5] - Total Liabilities increased by CHF 9.76 million, with current liabilities rising by CHF 8.63 million, mainly due to increases in accrued expenses and other payables (CHF 8.76 million) and warrant liabilities (CHF 2.44 million)[5] - Total Equity increased by CHF 1.5 million, despite accumulated losses growing by CHF 57.12 million, offset by a CHF 52.48 million increase in share premium and a CHF 6.94 million increase in reserve for share-based payment[5] Statements of Loss Oculis Holding AG reported a net loss of CHF 20.19 million for the three months ended September 30, 2024, and CHF 57.12 million for the nine months ended September 30, 2024. This represents an increase in loss for the three-month period compared to 2023, but a decrease for the nine-month period, primarily due to the absence of the non-recurring merger and listing expense incurred in 2023. Operating expenses significantly increased in R&D and G&A for both periods in 2024 Loss Statement Summary | Metric (CHF thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Grant income | 216 | 219 | 683 | 698 | | Operating expenses | (18,347) | (13,178) | (56,627) | (69,228) | | Research and development expenses | (12,999) | (8,872) | (40,320) | (21,218) | | General and administrative expenses | (5,348) | (4,306) | (16,307) | (13,147) | | Merger and listing expense | - | - | - | (34,863) | | Operating loss | (18,131) | (12,959) | (55,944) | (68,530) | | Finance result | (2,041) | (4,570) | (1,100) | (7,653) | | Loss before tax for the period | (20,172) | (17,529) | (57,044) | (76,183) | | Income tax (expense) benefit | (18) | 116 | (78) | (120) | | Loss for the period | (20,190) | (17,413) | (57,122) | (76,303) | | Basic and diluted loss per share | (0.48) | (0.48) | (1.44) | (2.76) | - For the three months ended September 30, 2024, the loss for the period increased by CHF 2.78 million (from CHF 17.41 million to CHF 20.19 million) compared to the prior year[7] - For the nine months ended September 30, 2024, the loss for the period decreased by CHF 19.18 million (from CHF 76.30 million to CHF 57.12 million) compared to the prior year, primarily due to the absence of the CHF 34.86 million merger and listing expense in 2023[7] - Research and development expenses increased by 46.5% for the three months and 89.9% for the nine months ended September 30, 2024, compared to the same periods in 2023[7] Statements of Comprehensive Loss Oculis Holding AG reported a total comprehensive loss of CHF 20.70 million for the three months ended September 30, 2024, and CHF 57.98 million for the nine months ended September 30, 2024. The three-month period saw a higher comprehensive loss compared to 2023, while the nine-month period showed a decrease, consistent with the loss for the period. Other comprehensive loss items included actuarial losses and foreign currency translation differences Comprehensive Loss Summary | Metric (CHF thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Loss for the period | (20,190) | (17,413) | (57,122) | (76,303) | | Actuarial losses of defined benefit plans | (472) | (21) | (847) | (296) | | Foreign currency translation differences | (37) | (1,676) | (7) | (4,967) | | Foreign currency translation differences recycling | - | 4,978 | - | 4,978 | | Other comprehensive (loss) income for the period | (509) | 3,281 | (854) | (285) | | Total comprehensive loss for the period | (20,699) | (14,132) | (57,976) | (76,588) | - Total comprehensive loss for the three months ended September 30, 2024, increased by CHF 6.57 million compared to the prior year[10] - Total comprehensive loss for the nine months ended September 30, 2024, decreased by CHF 18.61 million compared to the prior year[10] Statements of Changes in Equity Oculis Holding AG's total equity increased from CHF 93.73 million at January 1, 2024, to CHF 95.23 million at September 30, 2024. This increase was primarily driven by share issuances related to a Registered Direct Offering and share-based compensation expense, partially offset by the loss for the period and actuarial losses Changes in Equity Summary | Metric (CHF thousands) | Balance as of Jan 1, 2024 | Loss for the period | Other comprehensive loss | Share-based compensation expense | Issuance of ordinary shares (Registered Direct Offering) | Transaction costs (Registered Direct Offering) | Issuance of shares held as treasury | Stock options exercised and RSU's vested | Balance as of Sep 30, 2024 | | :--------------------------------------- | :------------------------ | :------------------ | :----------------------- | :------------------------------ | :---------------------------------------------------- | :------------------------------------------- | :---------------------------------- | :--------------------------------------- | :--------------------------------------- | | Share capital | 366 | - | - | - | 50 | - | (10) | 3 | 429 | | Share premium | 288,162 | - | - | - | 53,491 | (1,868) | - | 860 | 340,645 | | Reserve for share-based payment | 6,379 | - | - | 6,940 | - | - | - | - | 13,319 | | Actuarial loss on post-employment benefit obligations | (1,072) | - | (847) | - | - | - | - | - | (1,919) | | Treasury shares | - | - | - | - | - | - | (10) | - | (10) | | Cumulative translation adjustments | (327) | - | (7) | - | - | - | - | - | (334) | | Accumulated losses | (199,780) | (57,122) | - | - | - | - | - | - | (256,902) | | Total equity | 93,728 | (57,122) | (854) | 6,940 | 53,541 | (1,868) | (10) | 863 | 95,228 | - Total equity increased by CHF 1.5 million from January 1, 2024, to September 30, 2024[13] - Share premium increased by CHF 52.48 million, largely due to the Registered Direct Offering (CHF 53.49 million) and stock options exercised (CHF 0.86 million), partially offset by transaction costs (CHF 1.87 million)[13] - Accumulated losses increased by CHF 57.12 million due to the loss for the period, while the reserve for share-based payment increased by CHF 6.94 million[13] Statements of Cash Flows For the nine months ended September 30, 2024, Oculis Holding AG experienced a net decrease in cash and cash equivalents of CHF 2.26 million, a significant change from the CHF 12.46 million increase in the prior year. This was primarily due to reduced net cash inflow from financing activities and continued cash outflow from operating and investing activities Cash Flow Summary | Metric (CHF thousands) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash outflow for operating activities | (37,141) | (40,828) | | Net cash outflow for investing activities | (16,442) | (75,914) | | Net cash inflow from financing activities | 51,322 | 129,206 | | (Decrease) increase in cash and cash equivalents | (2,261) | 12,464 | | Cash and cash equivalents, beginning of period | 38,327 | 19,786 | | Cash and cash equivalents, end of period | 35,632 | 30,724 | - Net cash outflow from operating activities decreased by CHF 3.69 million (from CHF 40.83 million to CHF 37.14 million) year-over-year[15] - Net cash outflow from investing activities decreased significantly by CHF 59.47 million (from CHF 75.91 million to CHF 16.44 million) year-over-year, primarily due to lower payments for short-term financial assets[15] - Net cash inflow from financing activities decreased by CHF 77.88 million (from CHF 129.21 million to CHF 51.32 million) year-over-year, largely due to the absence of proceeds from the EBAC merger and listing in 2023[15] Notes to the Unaudited Condensed Consolidated Interim Financial Statements 1. Corporate Information Oculis Holding AG, a Swiss biopharmaceutical company incorporated in October 2022, focuses on developing treatments for ophthalmology. The Group comprises five wholly-owned subsidiaries across Switzerland, Iceland, France, the US, and Hong Kong. Legacy Oculis merged into Oculis Operations in July 2023, and a subsidiary created for the Business Combination was dissolved in April 2024 - Oculis Holding AG is a Swiss stock corporation, incorporated on October 31, 2022, focused on biopharmaceutical products in ophthalmology[16][17] - As of September 30, 2024, Oculis controls five wholly-owned subsidiaries: Oculis Operations Sàrl (Switzerland), Oculis ehf. (Iceland), Oculis France Sàrl (France), Oculis US, Inc. (USA), and Oculis HK, Limited (Hong Kong)[18] - Legacy Oculis merged with Oculis Operations on July 6, 2023, and Oculis Merger Sub II Company was dissolved on April 18, 2024[18][19] 2. Basis of Preparation and Changes to the Group's Accounting Policies The interim financial statements are prepared on a going concern basis, with the Board of Directors confident in meeting obligations for the next 12 months due to recent financing activities. The company acknowledges the need for future capital to support operations and mitigate risks inherent in a late-clinical stage biopharmaceutical business. These statements comply with IAS 34 and are consistent with prior annual IFRS statements, with no material impact from new accounting standards in the interim period 2.A Going concern - The Group's accounts are prepared on a going concern basis, with the Board of Directors believing recent financing activities provide sufficient funds for at least the next 12 months[20] - Oculis is a late-clinical stage company exposed to inherent business risks, and its long-term viability depends on its ability to raise additional capital[21] - Inability to raise additional capital could lead to delays, scaling back, or discontinuation of product candidates, or less favorable collaboration terms[21] 2.B Statement of compliance - The unaudited condensed consolidated interim financial statements are prepared in accordance with IAS 34 - Interim Financial Reporting[22] - Share numbers and loss per share for periods prior to the March 2, 2023 Business Combination have been adjusted by an exchange ratio of 1.1432[23] 2.C Functional currency - The Group's financial statements are expressed in Swiss Francs (CHF), which is the Company's functional and presentation currency[24] - Oculis Iceland's functional currency is CHF, while other subsidiaries use their local currency[24] - Assets and liabilities of foreign operations are translated at reporting date exchange rates, and profit or loss statements at average monthly rates, with exchange differences recognized in other comprehensive income[25] 3. Summary of Material Accounting Policies, Critical Judgments and Accounting Estimates There have been no material changes to the Group's accounting policies from the December 31, 2023 audited financial statements, except for the recognition of warrant instruments as liabilities at fair value. Critical judgments and accounting estimates remain consistent. The Company is evaluating the potential impact of IFRS 18, effective January 1, 2027 3.A Material accounting policies - Warrant instruments are recognized as liabilities at fair value and adjusted each reporting period, with changes recognized in the consolidated statements of loss[27] - The Blackrock Warrant is classified as a liability due to its exercise price being fixed in USD (not the Company's functional currency) and is valued using the Black-Scholes option-pricing model[28] - EBAC Public Warrants are valued based on quoted market prices (Level 1), and EBAC Private Warrants are valued equivalently (Level 2)[29] 3.B Critical judgments and accounting estimates - Critical accounting estimates, assumptions, and judgments are consistent with those applied in the audited consolidated financial statements for the year ended December 31, 2023[30] 3.C New accounting standards, interpretations, and amendments adopted by the Group - No new IFRS Accounting Standards or amendments mandatory for 2024 have a material impact in the interim period[32] - The Company is evaluating the potential material effect of IFRS 18, effective for periods beginning on or after January 1, 2027[32] 4. Financing Activities Oculis engaged in several financing activities in 2023 and 2024 to secure capital. In 2024, these included a new loan facility agreement with Kreos Capital (Blackrock), an At-the-Market (ATM) Offering Program, and a Registered Direct Offering which also led to a Nasdaq Iceland listing. These follow the significant Business Combination with EBAC and a Public Offering in 2023, which included PIPE and CLA financing Loan Facility - On May 29, 2024, Oculis entered into a loan facility agreement with Kreos Capital (Blackrock) for up to CHF 50.0 million (potentially CHF 65.0 million)[33] - No amounts were drawn under the Loan Agreement as of September 30, 2024[33] - A Blackrock Warrant was issued, exercisable for up to 361,011 ordinary shares at $12.17 (CHF 10.26) per share, with an exercise period of up to seven years[34][35] - CHF 0.8 million in transaction costs were incurred and capitalized as a prepayment for liquidity services[36] At-the-Market Offering Program - An ATM Offering Program was established on May 8, 2024, allowing the sale of up to $100.0 million (CHF 84.4 million) in ordinary shares through Leerink Partners[37] - The Company issued 1,000,000 ordinary shares to be held as treasury shares for future settlement under the program[37] - No sales were made under the ATM Offering Program through September 30, 2024, but CHF 0.3 million in transaction costs were capitalized[37][38] Registered Direct Offering and Nasdaq Iceland Main Market listing - On April 22, 2024, Oculis closed a Registered Direct Offering, issuing 5,000,000 ordinary shares at CHF 10.70 ($11.75) per share, generating gross proceeds of CHF 53.5 million ($58.8 million)[39] - The Company commenced trading on the Nasdaq Iceland Main Market on April 23, 2024[39] - Approximately CHF 2.5 million in transaction costs were incurred, with CHF 1.9 million recorded as a reduction of share premium[39] Public offering of ordinary shares - In June 2023, Oculis completed a Public Offering of 3,654,234 ordinary shares at CHF 10.45 ($11.50) per share[40] - The Public Offering generated total gross proceeds of CHF 38.2 million ($42.0 million)[40] Business combination with European Biotech Acquisition Corp - Oculis consummated a Business Combination with European Biotech Acquisition Corp (EBAC) on March 2, 2023[41] - The transaction resulted in gross proceeds of CHF 97.6 million ($103.7 million)[41] - Oculis assumed EBAC's public and private warrants and was listed on the Nasdaq Global Market[41] PIPE and CLA financing in March 2023 - PIPE financing generated CHF 67.1 million ($71.2 million) for 7,118,891 shares[42] - CLA financing generated CHF 18.5 million ($19.7 million) for 1,967,000 ordinary shares[43] - Aggregate gross cash proceeds from PIPE and CLA financing totaled CHF 85.6 million ($90.9 million) for 9,085,891 ordinary shares[44] Merger and listing expense - The Business Combination was accounted for as a capital reorganization under IFRS 2, not a business combination[45] - A non-recurring, non-cash expense of CHF 34.9 million was recognized in Q1 2023 for the stock exchange listing service[45] Earnout consideration - Legacy Oculis equity holders received 3,793,995 earnout shares and 369,737 earnout options with an exercise price of CHF 0.01[46] - Earnout consideration is subject to forfeiture if share price targets of $15.00, $20.00, and $25.00 are not achieved by March 2, 2028[47] 5. Segment Information Oculis operates as a single business segment, managed by one team reporting to the CEO. The company's non-current assets are geographically distributed, with the majority of intangible assets in Switzerland, and property, equipment, and right-of-use assets spread across Switzerland, Iceland, and other locations - The Company is managed and operated as one business, with a single reporting segment[48] Non-current Assets by Geography | Asset Category | Switzerland (Sep 30, 2024) | Iceland (Sep 30, 2024) | Others (Sep 30, 2024) | Total (Sep 30, 2024) | | :-------------------------- | :------------------------- | :----------------------- | :-------------------- | :--------------------- | | Intangible assets | 12,206 | - | - | 12,206 | | Property and equipment, net | 161 | 192 | 13 | 366 | | Right-of-use assets | 739 | 620 | 27 | 1,386 | | Total | 13,106 | 812 | 40 | 13,958 | - Intangible assets are entirely located in Switzerland[48] 6. Intangible Assets As of September 30, 2024, intangible assets remained stable at CHF 12.2 million, representing licenses for OCS-02 (Licaminlimab) from Novartis and OCS-05 (formerly ACT-01) technology from Accure Therapeutics. OCS-02 is a topical anti-TNFα antibody for ophthalmic indications, while OCS-05 is a neuroprotective drug candidate for ophthalmology applications - Intangible assets totaled CHF 12.2 million as of September 30, 2024, and December 31, 2023[49] - These assets represent licenses for OCS-02 (Licaminlimab) from Novartis and OCS-05 (formerly ACT-01) technology from Accure Therapeutics[49] - OCS-02 is a topical anti-TNFα antibody for ophthalmic indications, and OCS-05 is a neuroprotective drug candidate for ophthalmology applications[49] 7. Income and Expenses Oculis's income primarily consists of grant income, which remained stable. Operating expenses, particularly R&D and G&A, significantly increased in 2024 due to active clinical trials and higher personnel costs, including share-based compensation. The finance result improved due to lower fair value adjustments on warrant liabilities and reduced foreign currency exchange losses for the nine-month period 7.A Grant income - Grant income for the three and nine months ended September 30, 2024, was CHF 0.2 million and CHF 0.7 million, respectively, consistent with 2023[50] - Grant income reflects reimbursement of R&D expenses and income from research projects managed by Icelandic governmental institutions[50] 7.B Operating expenses Operating Expenses Breakdown | Category | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development expenses | 12,999 | 8,872 | 40,320 | 21,218 | | General and administrative expenses | 5,348 | 4,306 | 16,307 | 13,147 | | Total Operating expenses | 18,347 | 13,178 | 56,627 | 69,228 | | Personnel expense (R&D) | 2,640 | 1,715 | 7,682 | 4,736 | | Personnel expense (G&A) | 2,950 | 1,906 | 8,157 | 5,013 | | Share-based compensation (R&D) | 1,099 | 565 | 3,630 | 1,189 | | Share-based compensation (G&A) | 1,401 | 635 | 3,310 | 1,377 | | External service providers (R&D) | 10,101 | 6,975 | 32,059 | 16,018 | | External service providers (G&A) | 1,706 | 1,741 | 5,761 | 5,612 | | Merger and listing expense | - | - | - | 34,863 | - The increase in R&D external service providers is related to ongoing Phase 3 DIAMOND-1 and DIAMOND-2 clinical trials (OCS-01 in DME), Phase 3 OPTIMIZE-2 (OCS-01 in ocular surgery), and completed Phase 2b RELIEF (OCS-02 in DED)[52] - The increase in share-based compensation expense was related to accelerated vesting of certain options upon an employee's death, resulting in CHF 1.0 million expense recognition for the nine months ended September 30, 2024[52] 7.C Finance result Finance Result Breakdown | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Finance income | 556 | 520 | 1,797 | 773 | | Finance expense | (264) | (11) | (393) | (1,303) | | Fair value adjustment on warrant liabilities | (445) | (2,434) | (2,143) | (4,638) | | Foreign currency exchange gain (loss) | (1,888) | 2,333 | (361) | 2,493 | | Foreign currency translation differences recycling | - | (4,978) | - | (4,978) | | Finance result | (2,041) | (4,570) | (1,100) | (7,653) | - Finance income primarily consists of interest income earned from the Company's short-term financial assets[56] - The foreign currency exchange loss for Q3 2024 was primarily related to the U.S. dollar weakening against the Swiss Franc, offsetting earlier gains[57] 8. Other Current Assets and Accrued Income Other current assets decreased from CHF 8.49 million at December 31, 2023, to CHF 4.45 million at September 30, 2024, mainly due to the advancement of clinical trials reducing prepaid development expenses. Conversely, prepaid general and administrative expenses increased due to capitalized transaction costs for the ATM Offering Program and Loan Agreement. Accrued income, primarily from Icelandic R&D tax credits, increased to CHF 1.57 million, but the tax credit percentage and cap will revert to lower levels starting in 2025 Other Current Assets Breakdown | Category | Sep 30, 2024 | Dec 31, 2023 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Prepaid clinical and technical development expenses | 578 | 6,748 | (6,170) | | Prepaid general and administrative expenses | 3,660 | 1,412 | 2,248 | | Prepaid VAT | 212 | 328 | (116) | | Total | 4,450 | 8,488 | (4,038) | - The decrease in prepaid clinical and technical development expenses is due to advancements of clinical trials in 2024[58] - The increase in prepaid general and administrative expenses is due to capitalized transaction costs related to the ATM Offering Program and Loan Agreement[58] Accrued Income Movement | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Balance as of January 1, | 876 | 912 | | Accrued income recognized during the period | 683 | 698 | | Foreign exchange revaluation | 9 | 15 | | Balance as of September 30, | 1,568 | 1,625 | - Beginning in 2025, the Icelandic R&D tax credit percentage will revert from 35% to 20%, and the cap on eligible expenses will decrease from ISK 1,100 million (CHF 6.9 million) to ISK 900 million (CHF 5.6 million)[60] 9. Share-Based Compensation Oculis's share-based compensation expense significantly increased to CHF 6.9 million for the nine months ended September 30, 2024, from CHF 2.6 million in 2023, largely due to the 2023 ESOP and accelerated vesting of options. The 2023 ESOP allows for various equity incentives, with options and SARs valued using the Black-Scholes model and RSUs at closing stock price. The reserve for share-based payment nearly doubled 2023 Employee Stock Option and Incentive Plan - The 2023 Employee Stock Option and Incentive Plan (ESOP) was adopted on March 2, 2023, to grant equity incentives for talent acquisition and retention[61] - The plan allows for grants of share-based options, stock appreciation rights (SARs), restricted stock units (RSUs), and other awards[61] - Options granted typically vest over one to four years and expire one day before the tenth anniversary of the grant date[62] Option awards and SARs - The fair value of option awards and SARs is determined using the Black-Scholes option-pricing model[63] Weighted Average Fair Value of Options and SARs | Period | CHF per share | USD per share | | :-------------------------- | :------------ | :------------ | | 9 Months Ended Sep 30, 2024 | 7.90 | 8.96 | | 9 Months Ended Sep 30, 2023 | 5.06 | 5.50 | Option and SAR Activity | Metric | 2024 Number of awards | 2023 Number of awards | | :-------------------------------- | :-------------------- | :-------------------- | | Outstanding as of January 1, | 3,466,210 | 1,762,949 | | Options granted | 1,760,922 | 1,598,000 | | SARs granted | — | 134,765 | | Earnout options granted | — | 369,737 | | Forfeited | (288,312) | (32,570) | | Exercised | (290,511) | (61,152) | | Outstanding as of September 30, | 4,648,309 | 3,771,729 | - The number of exercisable options and SARs increased to 1,730,938 as of September 30, 2024, from 1,131,286 in 2023[69] Restricted stock units - RSUs entitle the grantee to one ordinary share upon vesting, with fair value determined by the closing stock price on the grant date[70] - Compensation cost is amortized over the one to four-year vesting period[70] RSU Activity | Metric | Number of awards | Weighted average grant date fair value (CHF) | | :-------------------------------- | :--------------- | :------------------------------------------- | | Outstanding as of January 1, 2024 | — | — | | RSUs granted | 466,908 | 9.76 | | RSUs forfeited | — | — | | RSUs vested/settled | (4,715) | 10.52 | | Outstanding as of September 30, 2024 | 462,193 | 9.33 | Restricted shares awards - Restricted shares granted under the 2018 ESOP were immediately exercised and expensed at grant date[72] - Call options to repurchase shares diminished ratably over three years and all expired in August 2024[72] - As of September 30, 2024, all 1,186,932 restricted shares exercised were not subject to repurchase[72] Share-based compensation expense Share-based Compensation Expense Summary | Period | 2024 | 2023 | | :-------------------------- | :----- | :----- | | 3 Months Ended Sep 30 | 2,500 | 1,200 | | 9 Months Ended Sep 30 | 6,900 | 2,600 | - CHF 1.0 million of expense was recognized during the nine months ended September 30, 2024, due to accelerated vesting of options upon an employee's death[74] - The reserve for share-based payment increased from CHF 6.4 million (Dec 31, 2023) to CHF 13.3 million (Sep 30, 2024)[73] Earnout options - Legacy Oculis equity holders received 369,737 earnout options with an exercise price of CHF 0.01 as a result of the Business Combination[75] - As of September 30, 2024, the share price targets required for these options to vest had not yet been achieved[75] 10. Cash and Cash Equivalents, and Short-Term Financial Assets As of September 30, 2024, Oculis held CHF 35.63 million in cash and cash equivalents and CHF 69.84 million in short-term financial assets, primarily fixed-term bank deposits. While cash and cash equivalents decreased slightly from December 31, 2023, short-term financial assets significantly increased, with a notable shift in currency allocation towards Swiss Francs for short-term financial assets Cash and Short-Term Financial Assets by Currency | Currency | Cash and cash equivalents (Sep 30, 2024) | Cash and cash equivalents (Dec 31, 2023) | Short-term financial assets (Sep 30, 2024) | Short-term financial assets (Dec 31, 2023) | | :--------------- | :--------------------------------------- | :--------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Swiss Franc | 15,408 | 19,144 | 58,031 | 33,532 | | US Dollar | 16,322 | 16,610 | 11,810 | 15,148 | | Euro | 3,668 | 2,020 | - | 4,644 | | Iceland Krona | 156 | 542 | - | - | | Other | 78 | 11 | - | - | | Total | 35,632 | 38,327 | 69,841 | 53,324 | - Short-term financial assets consist of fixed-term bank deposits with maturities between three and six months[76] 11. Warrant Liabilities Oculis's total warrant liabilities increased to CHF 7.81 million as of September 30, 2024, from CHF 5.37 million at January 1, 2024. This increase was primarily due to a fair value loss of CHF 2.14 million recognized during the nine-month period, driven by an increase in share price and the issuance of the Blackrock Warrant. The Blackrock Warrant is classified as a liability due to its USD-fixed exercise price and is valued using the Black-Scholes model Warrant Liabilities Movement | Metric | Blackrock Warrant (Sep 30, 2024) | EBAC Warrants (Sep 30, 2024) | Total Warrant Liabilities (Sep 30, 2024) | Blackrock Warrant (Jan 1, 2024) | EBAC Warrants (Jan 1, 2024) | Total Warrant Liabilities (Jan 1, 2024) | | :-------------------------------- | :------------------------------- | :--------------------------- | :--------------------------------------- | :------------------------------ | :---------------------------- | :-------------------------------------- | | Balance as of January 1, | - | 5,370 | 5,370 | - | 5,370 | 5,370 | | Issuance of warrants | 294 | - | 294 | - | - | - | | Fair value (gain)/loss on warrant liability | (22) | 2,165 | 2,143 | - | - | - | | Exercise of public and private warrants | - | - | - | - | - | - | | Balance as of September 30, | 272 | 7,535 | 7,807 | - | 5,370 | 5,370 | - The Blackrock Warrant is classified as a liability because its exercise price is fixed in USD, which is not the Company's functional currency[78] - For the nine months ended September 30, 2024, the Company recognized fair value losses of CHF 2.14 million on warrant liabilities, primarily due to an increase in share price and the issuance of the Blackrock Warrant[80] - 49 warrant shares were exercised during the nine months ended September 30, 2024, at a price of CHF 9.95 ($11.50) per share[80] 12. Accrued Expenses and Other Payables Accrued expenses and other payables significantly increased to CHF 14.70 million as of September 30, 2024, from CHF 5.95 million at December 31, 2023. This substantial rise was primarily driven by a CHF 8.17 million increase in product development related expenses, reflecting the advancement of Oculis's development pipeline in multiple clinical trials during 2024 Accrued Expenses and Other Payables Breakdown | Category | Sep 30, 2024 | Dec 31, 2023 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Product development related expenses | 10,970 | 2,801 | 8,169 | | Personnel related expenses | 2,694 | 2,301 | 393 | | General and administration related expenses | 937 | 765 | 172 | | Other payables | 103 | 81 | 22 | | Total | 14,704 | 5,948 | 8,756 | - The increase in product development related accrued expenses is mainly due to advancements in the development pipeline across multiple clinical trials in 2024[82] 13. Commitments and Contingencies Oculis has significant research and development commitments, totaling CHF 36.81 million as of September 30, 2024, a decrease from CHF 50.49 million at December 31, 2023. These commitments are primarily for external research projects, including contract research organizations and clinical sites. Additionally, the company has potential future milestone payments of CHF 94.6 million ($112.1 million) under its license agreement with Accure for OCS-05 technology, with upcoming milestones related to IND approval and proof-of-concept data expected within six months Research and development commitments R&D Commitments by Period | Period | Sep 30, 2024 | Dec 31, 2023 | | :-------------------------- | :----------- | :----------- | | Within one year | 21,516 | 23,625 | | Between one and five years | 15,294 | 26,867 | | Total | 36,810 | 50,492 | - Commitments for external research projects decreased by CHF 13.68 million from December 31, 2023, to September 30, 2024[84] Commitments related to Accure license agreement - Oculis has potential future milestone payments of CHF 94.6 million ($112.1 million) under the Accure license agreement for OCS-05 technology[86] - Upcoming potential milestones (within six months) include IND approval for OCS-05 intravenous formulation and positive PoC data for AON, totaling CHF 1.0 million ($1.2 million)[86] - Royalties on net sales of licensed products range from one digit to low teens based on sales thresholds[86] 14. Shareholders' Equity Oculis's shareholders' equity structure includes conditional capital for various future issuances (bonds, employee benefits, warrants, earnout options) totaling CHF 209,405.43, a capital band allowing for share capital increases up to CHF 227,218.50, and treasury shares held for the ATM Offering Program. During the nine months ended September 30, 2024, shares were issued from conditional capital for option exercises and RSU settlements 14.A Conditional capital - Conditional capital as of September 30, 2024, amounts to a maximum of CHF 209,405.43 (20,940,543 ordinary shares) for potential future issuances[87] - Conditional capital is allocated for new bonds/debt instruments (up to 6,750,000 shares), employee benefit plans (up to 9,566,302 shares), EBAC public and private warrants (up to 4,254,138 shares), and earnout options (up to 370,103 shares)[87][88][90][92] - During the nine months ended September 30, 2024, 295,226 shares were issued for option exercises and RSU settlements, and 149,247 warrants were exercised[89][91] 14.B Capital band - The Company has a capital band allowing the Board of Directors to increase share capital by a maximum of CHF 227,218.50 (22,721,850 ordinary shares) until May 29, 2029[93] - As of September 30, 2024, 41,944,980 ordinary shares were issued and outstanding[93] 14.C Treasury shares - 1,000,000 ordinary shares were issued from the capital band and held as treasury shares in connection with the ATM Offering Program[94] - These treasury shares are exclusively reserved for future settlement of sales under the ATM sales agreement[94] 15. Loss Per Share Oculis reported a basic and diluted net loss per share of CHF 0.48 for the three months and CHF 1.44 for the nine months ended September 30, 2024. This represents a stable loss per share for the three-month period but a significant improvement for the nine-month period compared to 2023 (CHF 2.76). The weighted-average number of shares used in the calculation increased for both periods. Potentially dilutive securities, totaling 13,201,865 as of September 30, 2024, were anti-dilutive and thus excluded from diluted loss per share calculations Loss Per Share Calculation | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :---------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss for the period attributable to Oculis shareholders (CHF thousands) | (20,190) | (17,413) | (57,122) | (76,303) | | Weighted-average number of shares used to compute basic and diluted loss per share | 41,807,918 | 36,330,836 | 39,659,305 | 27,673,950 | | Basic and diluted net loss per share | (0.48) | (0.48) | (1.44) | (2.76) | - Basic net loss per share is the same as diluted net loss per share due to the Company having a loss for all periods presented[96] - Potentially dilutive securities totaling 13,201,865 as of September 30, 2024, were anti-dilutive and excluded from diluted loss per share calculations[96] 16. Related Party Disclosures Key management compensation, including the Board of Directors and executive management, significantly increased for both the three and nine months ended September 30, 2024, compared to 2023. This rise was primarily driven by higher share-based compensation expense and an increase in the number of individuals classified as key management Key Management Compensation Summary | Category | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Salaries, cash compensation and other short-term benefits | 1,142 | 658 | 3,476 | 2,057 | | Pension | 97 | 66 | 294 | 222 | | Share-based compensation expense | 1,742 | 1,094 | 5,450 | 1,950 | | Total | 2,981 | 1,818 | 9,220 | 4,229 | - The number of key management individuals receiving compensation increased from 6 to 12 for the three and nine months ended September 30, 2024[98] - The number of Board of Directors members receiving compensation increased from 3 to 5 for the three and nine months ended September 30, 2024[98] 17. Subsequent Events There are no material subsequent events to report as of the date of these financial statements - No material subsequent events have occurred[99]