Ocular Therapeutix(OCUL) - 2025 Q4 - Annual Report

Clinical Trials and Product Development - AXPAXLI is currently in Phase 3 trials for wet AMD and diabetic retinal disease, with plans to submit an NDA based on Week 52 data from the SOL-1 trial[706][711] - The SOL-1 trial has maintained an exceptional subject retention rate, with no safety signals identified to date[707] - The SOL-R trial achieved its randomization target of 631 subjects, with topline data expected in Q1 2027, ahead of previous guidance[709] - The company plans to initiate the SOL-X trial in Q2 2026 to evaluate long-term safety for subjects from the SOL-1 and SOL-R trials[710] - The company expects to continue incurring losses as it advances clinical trials for product candidates, including SOL-1, SOL-R, and HELIOS-3, and supports the commercialization of DEXTENZA[768] Financial Performance - DEXTENZA net product revenue for 2025 was $51.8 million, a decrease of $11.6 million or 18.3% compared to 2024, primarily due to Medicare reimbursement caps and rebates[716] - Product revenue decreased to $51.8 million in 2025 from $63.5 million in 2024, a decline of $11.6 million year-over-year[739] - Total revenue for 2025 was $51.9 million, down from $63.7 million in 2024, reflecting a decrease of $11.8 million[738] - Collaboration revenue was minimal at $0.1 million in 2025, down from $0.3 million in 2024, with no expected revenue for 2026[742] - The net loss for the year ended December 31, 2025, was $265.9 million, compared to $193.5 million in 2024 and $80.7 million in 2023, indicating a significant increase in losses[767] Expenses and Cost Management - Research and development expenses are expected to increase as the company continues to support the development of its product candidates[728] - Research and development expenses increased to $197.1 million in 2025 from $127.6 million in 2024, an increase of $69.5 million year-over-year[743] - Selling and marketing expenses rose to $53.9 million in 2025, up from $41.6 million in 2024, reflecting an increase of $12.3 million[748] - General and administrative expenses increased to $64.4 million in 2025 from $60.7 million in 2024, an increase of $3.7 million[751] - Operating expenses for 2025 totaled $322.0 million, primarily for research and development, selling and marketing, and general and administrative activities[778] Cash Flow and Financing - Cash and cash equivalents as of December 31, 2025, were $737.1 million, with outstanding notes payable of $82.5 million under the Barings Credit Facility[762] - The company raised approximately $561.7 million from financing activities in 2025, compared to $332.1 million in 2024 and $169.8 million in 2023[778] - In February 2024, the company raised approximately $316.4 million from the sale of 32,413,560 shares of common stock and pre-funded warrants[764] - Net cash used in operating activities was $70.2 million for the year ended December 31, 2023, primarily due to a net loss of $80.7 million and unfavorable changes in operating assets and liabilities of $7.4 million[782] - Net cash provided by financing activities for the year ended December 31, 2023 was $169.8 million, including proceeds from public offerings of $117.3 million and drawings under the Barings Credit Facility of $82.5 million[786] Debt and Obligations - The Barings Credit Facility has an outstanding principal of $82.5 million as of December 31, 2025[734] - Total contractual obligations and commitments amounted to $88.7 million as of December 31, 2025, with $82.5 million related to the Barings Credit Agreement[787] - The company has a secured term loan facility with a principal amount of $82.5 million under the Barings Credit Agreement[814] Revenue Recognition and Accounting Policies - Revenue from product sales is recognized when the customer obtains control of the product, which occurs upon delivery[800] - The company estimates variable consideration for product sales, including trade discounts and allowances, which are recorded as reductions of revenue[801] - The company has received minimal product returns to date and expects returns of DEXTENZA to remain minimal[804] - Chargebacks for government healthcare providers are established in the same period that related revenue is recognized, impacting product revenue and trade receivables[805] - The company estimates future claims for rebates and records a liability for these rebates, impacting product revenue[806] Intellectual Property and Royalties - The company has in-licensed a significant portion of its intellectual property from Incept, with obligations to pay royalties based on net sales of licensed products[792] - The Royalty Fee Derivative Liability was valued at $13.9 million as of December 31, 2025[815] - The Royalty Fee Derivative Liability is measured using a Monte Carlo simulation, considering expected future revenue and estimated volatility[810] - Changes in the fair value of the Royalty Fee Derivative Liability have no impact on anticipated cash outflows[815] Future Outlook - The company anticipates continued increases in research and development expenses for 2026 and beyond as it progresses with multiple clinical trials[746] - The company anticipates additional funding will be required to support the commercialization of AXPAXLI if approved by the FDA[772] - The company plans to scale up manufacturing processes and capabilities to support sales and clinical trials of its product candidates[771]