Ocular Therapeutix(OCUL) - 2025 Q2 - Quarterly Report

FORWARD-LOOKING STATEMENTS This section outlines the forward-looking nature of statements within the report, cautioning readers about inherent risks and uncertainties - The report contains forward-looking statements regarding the company's strategy, future operations, financial position, revenues, costs, and management objectives, identified by words like "anticipate," "believe," "expect," and "intend"[8] - Key forward-looking statements include ongoing clinical trials for AXPAXLI (wet AMD, NPDR, DME) and OTX-TIC (OAG/OHT), commercialization efforts for DEXTENZA, manufacturing capabilities, regulatory approvals, future revenue estimates, and plans for additional capital raising[9][14] - Readers are cautioned not to place undue reliance on these statements, as actual results may differ materially due to various risks and uncertainties, particularly those detailed in the "Risk Factors" section of the Annual Report on Form 10-K[11] PART I – FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, cash flows, and stockholders' equity, along with detailed notes explaining the company's business, accounting policies, financial instruments, and other relevant disclosures for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Cash and cash equivalents | $391,134 | $392,102 | $(968) | -0.25% | | Total current assets | $433,375 | $440,987 | $(7,612) | -1.73% | | Total assets | $451,333 | $457,935 | $(6,602) | -1.44% | | Total current liabilities | $42,931 | $41,354 | $1,577 | 3.81% | | Total liabilities | $145,417 | $142,591 | $2,826 | 1.98% | | Total stockholders' equity | $305,916 | $315,344 | $(9,428) | -2.99% | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss (3 Months Ended) (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Product revenue, net | $13,395 | $16,379 | $(2,984) | -18.22% | | Collaboration revenue | $64 | $62 | $2 | 3.23% | | Total revenue, net | $13,459 | $16,441 | $(2,982) | -18.14% | | R&D expenses | $51,081 | $28,857 | $22,224 | 77.08% | | S&M expenses | $13,729 | $9,994 | $3,735 | 37.37% | | G&A expenses | $14,346 | $19,671 | $(5,325) | -27.07% | | Total operating expenses | $81,100 | $60,031 | $21,069 | 35.09% | | Loss from operations | $(67,641) | $(43,590) | $(24,051) | 55.18% | | Net loss | $(67,814) | $(43,777) | $(24,037) | 54.91% | | Net loss per share, basic | $(0.39) | $(0.26) | $(0.13) | 50.00% | Condensed Consolidated Statements of Operations and Comprehensive Loss (6 Months Ended) (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | % Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Product revenue, net | $24,028 | $31,094 | $(7,066) | -22.73% | | Collaboration revenue | $128 | $121 | $7 | 5.79% | | Total revenue, net | $24,156 | $31,215 | $(7,059) | -22.61% | | R&D expenses | $93,938 | $49,592 | $44,346 | 89.42% | | S&M expenses | $27,877 | $20,177 | $7,700 | 38.16% | | G&A expenses | $30,694 | $33,818 | $(3,124) | -9.24% | | Total operating expenses | $155,715 | $106,422 | $49,293 | 46.32% | | Loss from operations | $(131,559) | $(75,207) | $(56,352) | 74.93% | | Net loss | $(131,867) | $(108,625) | $(23,242) | 21.40% | | Net loss per share, basic | $(0.77) | $(0.73) | $(0.04) | 5.48% | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash used in operating activities | $(99,909) | $(58,689) | $(41,220) | | Net cash used in investing activities | $(3,048) | $(997) | $(2,051) | | Net cash provided by financing activities | $101,989 | $323,419 | $(221,430) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(968) | $263,733 | $(264,701) | | Cash, cash equivalents and restricted cash at end of period | $392,748 | $461,304 | $(68,556) | Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (in thousands, except shares) | Metric (in thousands, except shares) | December 31, 2024 | June 30, 2025 | Change | | :----------------------------------- | :---------------- | :------------ | :----- | | Common Stock Shares | 157,749,490 | 172,925,389 | 15,175,899 | | Common Stock Par Value | $16 | $17 | $1 | | Additional Paid-in Capital | $1,206,412 | $1,328,850 | $122,438 | | Accumulated Deficit | $(891,084) | $(1,022,951) | $(131,867) | | Total Stockholders' Equity | $315,344 | $305,916 | $(9,428) | - The increase in common stock shares and additional paid-in capital was primarily driven by the issuance of common stock from public offerings, exercise of stock options, and employee stock purchase plans[23][77][78] - The accumulated deficit increased by $131.867 million, reflecting the net loss incurred during the six months ended June 30, 2025[23][19] Notes to the Condensed Consolidated Financial Statements 1. Nature of the Business - Ocular Therapeutix, Inc. is an integrated biopharmaceutical company focused on redefining the retina experience, leveraging its ELUTYX proprietary bioresorbable hydrogel-based formulation technology[27] - Key product candidates include AXPAXLI (axitinib intravitreal hydrogel) in Phase 3 clinical trials for wet AMD (SOL-1 and SOL-R) and completed Phase 1 for NPDR (HELIOS), with plans for NPDR and DME. The commercial product DEXTENZA is FDA-approved for ocular inflammation/pain and allergic conjunctivitis. OTX-TIC (travoprost intracameral hydrogel) is in a Phase 2 clinical trial for OAG/OHT[27][28] - The company has an accumulated deficit of $1,022,951 thousand as of June 30, 2025, and expects to fund operations through existing cash and cash equivalents of $391,134 thousand for at least the next 12 months, while observing a minimum liquidity covenant of $20,000 thousand[30] 2. Summary of Significant Accounting Policies - The unaudited condensed consolidated financial statements are prepared in conformity with GAAP, consistent with policies described in the Annual Report on Form 10-K for December 31, 2024[34] - Stock-based compensation is measured at fair value on the grant date and expensed over the requisite service period, net of estimated forfeitures. The company uses estimates for variable consideration, collaboration revenue, derivative fair values, and deferred tax assets[35][39] - Recently issued ASUs (2023-09 Income Taxes and 2024-03 Disaggregation of Income Statement Expenses) are not expected to have a significant impact on the consolidated financial statements[42][43] 3. Licensing Agreements and Deferred Revenue - The company has an exclusive worldwide license with Incept, LLC for ophthalmic technology, incurring low single-digit royalties on net sales of commercial products[44] Incept Royalties (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Incept Royalties | $319 | $441 | $830 | $882 | - Collaboration revenue of $64 thousand (Q2 2025) and $128 thousand (YTD Q2 2025) was recognized from the AffaMed License Agreement for a Phase 2 clinical trial of OTX-TIC, with the performance obligation substantially satisfied as of June 30, 2025[50][51] Deferred Revenue (in thousands) | Metric (in thousands) | Amount | | :-------------------- | :----- | | Deferred revenue at December 31, 2024 | $14,128 | | Amounts recognized into revenue | $(128) | | Deferred revenue at June 30, 2025 | $14,000 | 4. Cash Equivalents and Restricted Cash Cash, Cash Equivalents and Restricted Cash (in thousands) | Metric (in thousands) | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Cash and cash equivalents | $391,134 | $459,690 | | Restricted cash | $1,614 | $1,614 | | Total cash, cash equivalents and restricted cash | $392,748 | $461,304 | - Restricted cash is held as security deposits for real estate leases[53] 5. Inventory Inventory (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Raw materials | $219 | $214 | | Work-in-process | $1,736 | $1,489 | | Finished goods | $1,084 | $1,337 | | Total Inventory | $3,039 | $3,040 | 6. Expenses Accrued Expenses and Other Current Liabilities (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Accrued payroll and related expenses | $10,189 | $14,272 | | Accrued rebates and programs | $5,686 | $5,265 | | Accrued professional fees | $2,917 | $1,879 | | Accrued research and development expenses | $13,173 | $11,054 | | Accrued interest payable on Barings Credit Facility | $736 | $592 | | Accrued other | $1,716 | $2,055 | | Total Accrued expenses and other current liabilities | $34,417 | $35,117 | 7. Financial Liabilities - The company has a Barings Credit Facility of $82,474 thousand, maturing in 2029, with interest based on SOFR plus 6.75%. A Barings Royalty Fee Obligation (3.5% of DEXTENZA net sales) is embedded and accounted for as a freestanding derivative[57][58][59] Notes Payable, Net (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Barings Credit Facility | $82,474 | $82,474 | | Less: unamortized discount | $(12,568) | $(13,969) | | Total Notes Payable, net | $69,906 | $68,505 | - The Convertible Notes ($37,500 thousand principal) were converted on March 28, 2024, resulting in the issuance of 5,769,232 common shares and a net loss on extinguishment of $27,950 thousand[62][64] 8. Derivative Liability - The Barings Royalty Fee Obligation is accounted for as a Royalty Fee Derivative Liability, measured at fair value using a "with-and-without" method and Monte Carlo simulation[65] Royalty Fee Derivative Liability (in thousands) | Metric (in thousands) | Amount | | :-------------------- | :----- | | Balance at December 31, 2024 | $13,246 | | Change in fair value | $778 | | Balance at June 30, 2025 | $14,024 | - The Conversion Option Derivative Liability related to the Convertible Notes was extinguished in March 2024 upon conversion[67] 9. Risks and Fair Value - The company faces concentration of credit risk in cash and cash equivalents (held at three institutions) and accounts receivable (three specialty distributors)[68][69] Customer Revenue and Accounts Receivable Concentration | Customer | 3 Months Ended June 30, 2025 Revenue % | 3 Months Ended June 30, 2024 Revenue % | June 30, 2025 Accounts Receivable % | December 31, 2024 Accounts Receivable % | | :--------- | :------------------------------------- | :------------------------------------- | :------------------------------------ | :------------------------------------ | | Customer 1 | 40% | 42% | 45% | 46% | | Customer 2 | 26% | 24% | 28% | 28% | | Customer 3 | 10% | 12% | 10% | 8% | Change in Fair Value of Derivative Liabilities (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Change in fair value of Royalty Fee Derivative Liability | $(172) | $(2,454) | $(778) | $(9,689) | | Barings Royalty Fee | $(469) | $(573) | $(841) | $(1,088) | | Total Change in fair value of derivative liabilities | $(641) | $(3,027) | $(1,619) | $(8,179) | - The fair value of the Royalty Fee Derivative Liability is estimated using a Monte Carlo simulation, with key unobservable inputs being revenue volatility (65.2% as of June 30, 2025) and revenue discount rate (15.4% as of June 30, 2025)[73][76] 10. Equity - During the three and six months ended June 30, 2025, the company sold 11,548,364 common shares under the 2021 Sales Agreement, generating net proceeds of $94,025 thousand[77] - In February 2024, a private placement of common stock and pre-funded warrants generated approximately $316,353 thousand in net proceeds. As of June 30, 2025, 9,713,684 pre-funded warrants remained outstanding after 1,092,148 shares were exercised via cashless exercise[78] - In June 2024, authorized common stock shares were increased by 200,000,000 to 400,000,000[79] 11. Stock-Based Awards - The company operates under the 2021 Stock Incentive Plan, 2019 Inducement Stock Incentive Plan, and 2014 Employee Stock Purchase Plan (ESPP). Stockholders approved amendments in June 2025 to increase shares issuable under the 2021 Plan by 8,750,000 and the ESPP by 2,000,000[81][82][83] Stock-Based Awards Granted | Award Type | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :----------- | :--------------------------- | :--------------------------- | | Stock Options Granted | 3,243,075 | 6,466,301 | | RSUs Granted | 156,683 | 2,470,579 | | PSUs Granted | 1,500,000 | 1,500,000 | Total Stock-Based Compensation Expense (in thousands) | Expense Category (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $3,350 | $2,345 | $6,368 | $3,798 | | Selling and marketing | $1,068 | $689 | $2,245 | $1,526 | | General and administrative | $5,260 | $8,259 | $11,521 | $13,947 | | Total Stock-based compensation expense | $9,678 | $11,293 | $20,134 | $19,271 | 12. Income Taxes - No income taxes were provided for the periods presented due to a valuation allowance for the full amount of net deferred tax assets, as realization of future benefits is not likely[94] - The One Big Beautiful Bill Act (OBBB) signed on July 4, 2025, includes tax reform provisions, but the company does not anticipate a significant impact on its consolidated financial statements[95] 13. Net Loss Per Share Net Loss Per Share (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss attributable to common stockholders (in thousands) | $(67,814) | $(43,777) | $(131,867) | $(108,625) | | Weighted average common shares outstanding, basic | 172,594,662 | 165,824,778 | 171,004,629 | 148,922,937 | | Net loss per share - basic | $(0.39) | $(0.26) | $(0.77) | $(0.73) | - Diluted net loss per share was the same as basic net loss per share due to the anti-dilutive impact of potentially issuable common shares, including options, RSUs, and PSUs[96][97] 14. Segment Reporting - The company operates as a single operating segment focused on developing and commercializing therapies for retinal diseases and other eye conditions using its ELUTYX technology[98] - The Chief Operating Decision Maker (CODM), collectively the CEO and CFO/COO, allocates resources and assesses performance based on Net Loss[99] 15. Commitments and Contingencies - The company enters into indemnification agreements in the ordinary course of business but has not incurred any material costs to date[101] 16. Related Party Transactions - The company incurred fees for clinical development services from Boston Image Reading Center LLC (BIRC), where its CMO is a Director, totaling $4 thousand (Q2 2025) and $25 thousand (YTD Q2 2025)[102] - Fees and expenses related to services from i2Vision, affiliated with the CSO and CDO, were $43 thousand (Q2 2025) and a net credit of $(121) thousand (YTD Q2 2025)[103] - The consulting agreement with Heier Consulting, LLC was terminated in February 2024 upon Dr. Heier's employment as Chief Scientific Officer[107] 17. Subsequent Events - No subsequent events were noted by the company[108] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, detailing key business developments, a breakdown of financial performance components, and a comparison of financial results for the three and six months ended June 30, 2025, and 2024. It also covers liquidity, capital resources, and critical accounting policies Overview - The company is an integrated biopharmaceutical company focused on retinal diseases, utilizing its ELUTYX hydrogel technology[110] - Key product candidates include AXPAXLI for wet AMD, NPDR, and DME, and OTX-TIC for OAG/OHT. DEXTENZA is the commercial product for ocular inflammation/pain and allergic conjunctivitis[110][111] Key Business and Financial Developments AXPAXLI for wet AMD - The SOL-1 trial, a Phase 3 superiority trial for wet AMD, completed randomization of 344 subjects in December 2024. Topline results are expected in Q1 2026. An FDA-agreed SPA amendment allows for repeat dosing at Week 52 and Week 76 to support a 6-12 month dosing label[112][113][116][117] - The SOL-R trial, a Phase 3 non-inferiority trial for wet AMD, was initiated in June 2024 and completed enrollment. Topline results are expected in H1 2027. Rescue criteria were modified in June 2025 to align with real-world clinical practice[118][120] - The company plans a long-term, open-label extension study for both SOL trials to gather long-term safety data and further inform the AXPAXLI treatment paradigm, with details expected in Q3 2025[122][123] - Favorable results from SOL-1 and SOL-R could lead to an NDA submission via the 505(b)(2) pathway, potentially resulting in a superiority label and infrequent dosing (e.g., every 12 months)[124] AXPAXLI for NPDR and DME - The HELIOS trial for NPDR has been completed. The FDA provided positive written feedback on the design of a potential registrational clinical trial for AXPAXLI for NPDR in H1 2025[125] - Further details on the clinical strategy for AXPAXLI for NPDR and DME are expected in Q3 2025[125] OTX-TIC for OAG or OHT - A pilot repeat-dose sub-study is ongoing in the Phase 2 clinical trial to evaluate the safety of a repeat sustained-release dose of OTX-TIC 26 μg for OAG or OHT[126] - Upon completion of the sub-study, the company plans to evaluate an end-of-Phase 2 meeting with the FDA to determine next steps[126] Commercial Net Product Revenue (DEXTENZA) (in millions) | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net product revenue (DEXTENZA) | $13.4 | $16.4 | $(3.0) | -18.3% | Net Product Revenue (DEXTENZA) (in millions) | Metric (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | % Change | | :------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net product revenue (DEXTENZA) | $24.0 | $31.1 | $(7.1) | -22.8% | - The decrease in net product revenue is attributed to pricing strategy, distributor stocking patterns, buying patterns, and the negative impact of DEXTENZA's inclusion in the MIPS cost performance category for 2025[129] - In-Market Sales for DEXTENZA increased to approximately 44,000 units in Q2 2025, up 2,000 units YoY and 4,000 units QoQ, indicating growing demand as clinicians adjust to MIPS and increased sales efforts towards HOPDs[130] - A supplemental NDA for DEXTENZA was approved on April 7, 2025, expanding its label for pediatric use in ocular inflammation/pain and allergic conjunctivitis, though significant revenue from this expansion is not expected[132] Other Developments - The company does not anticipate a significant adverse effect on its business or operations from current tariffs, changes in trade policies, or the recently signed One Big Beautiful Bill Act (OBBB)[133][134] Components of our Financial Performance Revenue - Product revenue from DEXTENZA sales is recorded net of gross-to-net (GTN) provisions, including discounts, chargebacks, rebates, distribution fees, and returns[135] Operating Expenses Cost of Product Revenue - Cost of product revenue for DEXTENZA includes direct materials, royalties, direct labor (salaries, benefits, stock-based compensation), manufacturing overhead, transportation, and cost of scrap material[137] Research and Development Expenses - R&D expenses primarily consist of costs for clinical trials (investigative sites, CROs), employee-related expenses, regulatory activities, pre-commercial manufacturing, ongoing core technology development, facility expenses, and preclinical activities[136][138][142] - Direct R&D expenses are tracked program-by-program, while unallocated costs (employee/contractor, ELUTYX technology, manufacturing, facility) are deployed across multiple programs[140] - The successful development and commercialization of products are highly uncertain, with costs and timing dependent on clinical trial outcomes, regulatory approvals, market acceptance, and government regulation[141][143] Selling and Marketing Expenses - Selling and marketing expenses primarily include salaries and related costs (including stock-based compensation) for personnel, as well as consulting, advertising, and promotion costs[146] General and Administrative Expenses - General and administrative expenses mainly comprise salaries and related costs (including stock-based compensation) for executive, finance, IT, HR, and administrative functions, along with insurance, facility costs, and professional fees[147] Other Income (Expense) - Interest income is primarily from investments in money market funds. Interest expense is incurred on debt, including the Barings Credit Facility[148][149] - Changes in the fair value of derivative liabilities (Barings Credit Agreement's embedded royalty fee and the extinguished Convertible Notes' conversion option) are recorded as net gains or losses[150] - A loss on extinguishment of debt was recognized in March 2024 due to the conversion of the Convertible Notes[151] Results of Operations Comparison of the Three Months Ended June 30, 2025 and 2024 Financial Performance (3 Months Ended) (in thousands) | Metric (in thousands) | June 30, 2025 | June 30, 2024 | Change | % Change | | :-------------------- | :------------ | :------------ | :----- | :------- | | Product Revenue, net | $13,395 | $16,379 | $(2,984) | -18.22% | | Collaboration Revenue | $64 | $62 | $2 | 3.23% | | R&D Expenses | $51,081 | $28,857 | $22,224 | 77.08% | | S&M Expenses | $13,729 | $9,994 | $3,735 | 37.37% | | G&A Expenses | $14,346 | $19,671 | $(5,325) | -27.07% | | Interest Income | $3,455 | $6,036 | $(2,581) | -42.76% | | Interest Expense | $(3,016) | $(3,196) | $180 | -5.63% | | Change in Fair Value of Derivative Liabilities | $(641) | $(3,027) | $2,386 | -78.82% | | Net Loss | $(67,814) | $(43,777) | $(24,037) | 54.91% | - Product revenue decreased due to pricing strategy, distributor stocking, and MIPS impact, with GTN Provisions increasing to 51.7% of gross sales (from 39.6% in Q2 2024)[153][154] - R&D expenses significantly increased by $22.2 million, primarily driven by the progression of the SOL-1 and initiation/progression of the SOL-R clinical trials for AXPAXLI[157][159] - G&A expenses decreased by $5.4 million, mainly due to lower personnel-related costs following a strategic reduction in force and executive departures in Q2 2024[165][166] Comparison of the Six Months Ended June 30, 2025 and 2024 Financial Performance (6 Months Ended) (in thousands) | Metric (in thousands) | June 30, 2025 | June 30, 2024 | Change | % Change | | :-------------------- | :------------ | :------------ | :----- | :------- | | Product Revenue, net | $24,028 | $31,094 | $(7,066) | -22.73% | | Collaboration Revenue | $128 | $121 | $7 | 5.79% | | R&D Expenses | $93,938 | $49,592 | $44,346 | 89.42% | | S&M Expenses | $27,877 | $20,177 | $7,700 | 38.16% | | G&A Expenses | $30,694 | $33,818 | $(3,124) | -9.24% | | Interest Income | $7,282 | $9,958 | $(2,676) | -26.87% | | Interest Expense | $(6,000) | $(7,247) | $1,247 | -17.21% | | Change in Fair Value of Derivative Liabilities | $(1,619) | $(8,179) | $6,560 | -80.21% | | Loss on Extinguishment of Debt | $0 | $(27,950) | $27,950 | -100.00% | | Net Loss | $(131,867) | $(108,625) | $(23,242) | 21.40% | - Product revenue decreased by $7.1 million, with GTN Provisions increasing to 50.7% of gross sales (from 38.0% in YTD Q2 2024) due to increased WAC and OID[172][173] - R&D expenses increased by $44.3 million, primarily due to the progression of SOL-1, initiation/progression of SOL-R, and completion of the HELIOS trial[176][178] - Interest expense decreased by $1.2 million, mainly due to lower average debt balances after the conversion of Convertible Notes in March 2024[188] - A non-cash loss on extinguishment of debt of $28.0 million was recognized in YTD Q2 2024 due to the Convertible Notes conversion[190] Liquidity and Capital Resources Sources of Liquidity - As of June 30, 2025, the company had $391.1 million in cash and cash equivalents and $82.5 million in outstanding notes payable under the Barings Credit Facility[192] - In June 2025, the company sold 11,548,364 common shares under the 2021 Sales Agreement, generating $94.0 million in net proceeds[193] - In February 2024, a private placement of common stock and pre-funded warrants yielded approximately $316.4 million in net proceeds[194] Funding Requirements - The company has a history of significant operating losses, with a net loss of $131.9 million for the six months ended June 30, 2025, and an accumulated deficit of $1,023.0 million[196] - Substantial expenses are anticipated for ongoing clinical trials (SOL-1, SOL-R), potential new trials (AXPAXLI for NPDR/DME, long-term extension), manufacturing scale-up, commercialization efforts, and intellectual property protection[198][199][202][203] - Existing cash and cash equivalents are expected to fund planned operating expenses, debt service, and capital expenditures into 2028, excluding expenses for AXPAXLI for NPDR/DME and the long-term extension for wet AMD[201] - Future capital requirements depend on various factors, and additional financing may be sought through equity offerings, debt financings, or collaborations, which could dilute ownership or impose restrictive covenants[203][205] Cash Flows Cash Flow Activities (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :----------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Operating Activities | $(99,909) | $(58,689) | $(41,220) | | Investing Activities | $(3,048) | $(997) | $(2,051) | | Financing Activities | $101,989 | $323,419 | $(221,430) | - Net cash used in operating activities increased by $41.2 million, primarily due to a higher net loss, partially offset by non-cash adjustments and favorable changes in operating assets and liabilities[209] - Net cash provided by financing activities decreased by $221.4 million, mainly due to significant proceeds from a private placement in 2024 that did not recur in 2025, partially offset by proceeds from a public offering in 2025[212] Contractual Obligations and Commitments Contractual Obligations and Commitments (in thousands) | Obligation (in thousands) | Total | Less Than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | | :------------------------ | :---- | :--------------- | :----------- | :----------- | :---------------- | | Operating lease commitments | $8,371 | $3,480 | $4,789 | $102 | — | | Barings Credit Agreement | $82,474 | — | — | $82,474 | — | | Total | $90,845 | $3,480 | $4,789 | $82,576 | — | - The table includes enforceable and legally binding obligations, but excludes cancelable contracts for R&D activities and unquantifiable royalty payments to Incept, LLC[215][216][219] - Future interest payments on the Barings Credit Agreement and royalty fees on DEXTENZA sales are not estimable at this time[218][219] Off-Balance Sheet Arrangements - The company did not have any off-balance sheet arrangements during the periods presented[220] Critical Accounting Policies and Significant Judgments and Estimates - Critical accounting policies, including revenue recognition and derivative liabilities, are detailed in the Annual Report on Form 10-K[222] - The preparation of financial statements requires management to make subjective estimates and judgments that affect reported amounts, which are periodically reviewed[223] Recently Issued Accounting Pronouncements - Information regarding new accounting pronouncements is included in Note 2 to the condensed consolidated financial statements[224] Item 3. Quantitative and Qualitative Disclosures About Market Risk - The company is exposed to market risk from changes in interest rates, particularly affecting its $391.1 million in cash and cash equivalents invested in short-term money market funds[225] - The Barings Credit Facility ($82.5 million principal) has interest payments tied to SOFR, but an immediate 100 basis point change in SOFR is not expected to materially affect cash outflows[227] - The Royalty Fee Derivative Liability, valued at $14.0 million as of June 30, 2025, is subject to fair value changes, but a 10% change in the interest rate used in its valuation model would not materially affect its fair value[228] Item 4. Controls and Procedures - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[229] - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[230] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section states that the company is not currently involved in any material legal proceedings - The company is not presently a party to any material legal proceedings, nor are any material legal proceedings threatened against it[233] Item 1A. Risk Factors This section refers readers to the comprehensive discussion of risk factors in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - The company is subject to various risks that could materially and adversely affect its business, financial condition, and results of operations, as identified in the "Risk Factors" section of its Annual Report on Form 10-K[234] Item 5. Other Information This section addresses director and officer trading arrangements, confirming compliance with insider trading policies and Rule 10b5-1, and reporting no new or terminated trading arrangements during the quarter - Director and officer trading arrangements are made in accordance with the company's insider trading policy and Rule 10b5-1 to avoid concerns about trading on material nonpublic information[235][236] - During the three months ended June 30, 2025, none of the company's directors and officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[237] Item 6. Exhibits This section provides an index of all exhibits filed as part of this Quarterly Report on Form 10-Q - The report includes an Exhibit Index listing various documents, such as the Certificate of Amendment of Restated Certificate of Incorporation, amended Stock Incentive Plans, Employment Agreements, and certifications[238][240] SIGNATURES This section confirms the official signing of the report by the company's principal financial and accounting officer - The report was signed on August 5, 2025, by Donald Notman, Chief Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer), on behalf of Ocular Therapeutix, Inc[245][246][247]