What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-28 compared with 2021-03-11 · 229 added, 202 removed, 882 unchanged (33% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management, including our President and Chief Executive Officer and Chief Financial Officer recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and

management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2021, our President and Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for

external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for Ocular Therapeutix, Inc.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2020.

Our management, including our President and Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 ) .

Based on that assessment, our management concluded that, as of December 31, 2021, our internal control over financial reporting was effective.

The effectiveness of our internal control over financial reporting as of December 31, 2021, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears herein.

Changes in Internal Control Over Financial Reporting

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Other Information

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

Not Applicable.

Directors, Executive Officers and Corporate Governance

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Audit Committee Financial Expert

Our board of directors has determined that Bruce Peacock is the “audit committee financial expert” as defined by Item 407(d)(5) of Regulation S-K of the Exchange Act and is “independent” under the rules of the Nasdaq Global Market.

Our board of directors has determined that each of Bruce Peacock, who has provided us with notice of his intent to resign immediately following the 2022 Annual Meeting of Stockholders, and Merilee Raines, qualify as an “audit committee financial expert” as defined by Item 407(d)(5) of Regulation S-K of the Exchange Act and is “independent” under the rules of the Nasdaq Global Market.

Executive Compensation

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The following financial statements are filed as part of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets

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Form of Non-statutory Stock Option Agreement under 2019 Inducement Stock Incentive Plan

Amended and Restated License Agreement, dated January 27, 2012, between the Registrant and Incept LLC

Incorporated by Reference

Description of Exhibit

Amended and Restated License Agreement, dated January 27, 2012, between the Registrant and Incept LLC

Lease Agreement dated September 2, 2009, by and between the Registrant and RAR2-Crosby Corporate Center QRS, Inc., as amended.

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Lease Agreement dated June 17, 2016 between the WS NF 15 Crosby Drive, LLC and the Registrant

Collaboration, Option and License Agreement between the Registrant and Regeneron Pharmaceuticals, Inc.

dated October 10, 2016

Open Market Sales Agreement SM , dated as of April 5, 2019, by and between the Registrant and Jefferies LLC

Open Market Sale Agreement SM , dated as of August 9, 2021, by and between the Registrant and Jefferies LLC

Employment Agreement, by and between the Registrant and Philip Strassburger, dated August 28, 2020

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Employment Agreement, by and between the Registrant and Donald Notman, dated as of September 25, 2017

Second Amendment to Lease, by and between the Registrant and CCC Investors LLC, dated October 10, 2017

Incorporated by Reference

Description of Exhibit

Second Amendment to Lease, by and between the Registrant and CCC Investors LLC, dated October 10, 2017

Employment Agreement, by and between the Registrant and Michael Goldstein, dated as of September 25, 2017

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and Holcim (US) Inc.

Employment Agreement, by and between the Registrant and Patricia Kitchen, dated as of April 21, 2019

Incorporated by Reference

Description of Exhibit

Amendment to Collaboration, Option and License Agreement, by and between the Registrant and Regeneron, dated May 8, 2020

License Agreement, by and between the Registrant and AffaMed Therapeutics Limited, dated as of October 29, 2020

Supplement to License Agreement, by and between the Registrant and AffaMed Therapeutics Limited, dated as of January 18, 2021

Fourth Amended and Restated Credit and Security Agreement dated June 4, 2021 by and among the Registrant, MidCap Financial Trust, as administrative agent, and the Lenders listen therein

2021 Stock Incentive Plan

Form of Option Grant Agreement under 2021 Stock Incentive Plan

Form of Restricted Stock Unit Agreement under 2021 Stock Incentive Plan

Amendment No.

1 to License Agreement, by and between the Registrant and AffaMed Therapeutics (HK) Limited, dated as of October 28, 2021

Subsidiaries of the Registrant

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Inline XBRL Taxonomy Extension Calculation Linkbase Document

Incorporated by Reference

Description of Exhibit

Inline XBRL Taxonomy Extension Label Linkbase Database

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 11, 2021

February 28, 2022

OCULAR THERAPEUTIX, INC.

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(Principal Executive Officer)

March 11, 2021

February 28, 2022

/s/ Donald Notman

Chief Financial Officer

March 11, 2021

February 28, 2022

Donald Notman

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Chairman of the Board

March 11, 2021

February 28, 2022

Charles Warden

/s/ Jeffrey S.

March 11, 2021

February 28, 2022

/s/ Seung Suh Hong, PH.D.

March 11, 2021

February 28, 2022

Seung Suh Hong, PH.D.

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Lindstrom, M.D.

March 11, 2021

February 28, 2022

Lindstrom, M.D.

March 11, 2021

/s/ Merilee Raines

February 28, 2022

Merilee Raines

February 28, 2022

/s/ Leslie Williams

March 11, 2021

February 28, 2022

Leslie Williams

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Index to CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238)

Consolidated Balance Sheets

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To the Board of Directors and Stockholders of Ocular Therapeutix, Inc.

Opinion on the Financial Statements

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Ocular Therapeutix, Inc.

and its subsidiary (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss, of changes in stockholders’ equity (deficit) and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, of changes in stockholders’ equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely

detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Critical Audit Matters

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Valuation of the Derivative Liability

As described in Note 4 to the consolidated financial statements, the Company’s derivative liability balance was $98.3 million as of December 31, 2020 and the change in fair value recorded in other income (expense), net was expense of $86.2 million.

As described in Notes 2 and 4 to the consolidated financial statements, the Company’s derivative liability balance was $20.2 million as of December 31, 2021 and the change in fair value recorded in other income (expense), net was $78.1 million for the year ended December 31, 2021.

The derivative liability was recorded at fair value upon the issuance of the 2026 convertible notes and is subsequently remeasured to fair value at each reporting period.

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The difference between the entire instrument with the embedded conversion option compared to the instrument without the embedded conversion option is the fair value of the derivative, recorded as the derivative liability.

The fair value of the 2026

convertible notes with and without the conversion option is estimated using a binomial lattice approach.

The fair value of the 2026 convertible notes with and without the conversion option is estimated using a binomial lattice approach.

The main inputs to valuing the 2026 convertible notes with the conversion option as of December 31, 2021 include the Company’s stock price on the valuation date, the expected annual volatility of the Company’s stock and the bond yield.

The principal considerations for our determination that performing procedures relating to the valuation of the derivative liability is a critical audit matter are the significant judgment by management to determine the fair value of the derivative liability using a binomial lattice model;

this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating the audit evidence obtained related to the valuation of the derivative liability and management’s significant assumption related to the bond yield.

The significant assumption used in determining the bond yield is the market yield movements of a comparable instrument issued as of the valuation date, which is assessed and updated each period

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others, (i) the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of fair values for the derivative liability and (ii) comparing the independent estimate to management’s fair value estimate to evaluate the reasonableness of management’s assumptions.

Developing the independent estimate involved testing the completeness and accuracy of the inputs provided by management and evaluating management’s assumptions related to bond yield based on observable market yield movements.

These procedures included testing the effectiveness of controls relating to the derivative liability, including controls over the main inputs and significant assumption used to estimate the derivative liability.

These procedures also included , among others (i) the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of fair values for the derivative liability and (ii) comparing the independent estimate to management’s fair value estimate to evaluate the reasonableness of management’s estimate.

Developing the independent estimate involved testing the completeness and accuracy of the inputs provided by management and evaluating the reasonableness of management’s significant assumption related to market yield movements used in determining the bond yield by considering observable data.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

March 11, 2021

February 28, 2022

We have served as the Company’s auditor since 2008.

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Operating lease assets

Liabilities and Stockholders’ Equity (Deficit)

Liabilities and Stockholders’ Equity

Current liabilities:

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Total liabilities

Commitments and contingencies (Note 15)

Stockholders’ equity (deficit):

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

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Common stock, $ 0.0001 par value;

100,000,000 shares authorized and 75,996,732 and 50,333,559 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively

200,000,000 and 100,000,000 shares authorized and 76,731,940 and 75,996,732 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these consolidated financial statements.

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Net loss and comprehensive loss

Net loss per share, basic and diluted

Weighted average common shares outstanding, basic and diluted

Net loss per share, basic

Weighted average common shares outstanding, basic

Net loss per share, diluted

Weighted average common shares outstanding, diluted

The accompanying notes are an integral part of these consolidated financial statements.

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Balances at December 31, 2020

Issuance of common stock upon exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Issuance of common stock upon cashless exercise of warrant

Common stock issuance costs

Stock-based compensation expense

Balances at December 31, 2021

The accompanying notes are an integral part of these consolidated financial statements.

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Depreciation and amortization expense

Loss on disposal of property and equipment

Gain on disposal of property and equipment

Changes in operating assets and liabilities:

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Cash flows from financing activities:

Proceeds from issuance of notes payable, net

Proceeds from issuance of 2026 convertible notes, net of issuance costs

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Repayment of the Paycheck Protection Program Loan

Proceeds from issuance of common stock upon public offering, net

Proceeds from issuance of common stock upon public offering, net of issuance costs

Issuance costs from the issuance of common stock upon public offering

Repayment of notes payable

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

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Additions to property and equipment included in accounts payable and accrued expenses at balance sheet dates

Cashless exercise of warrant

Derivative liability in connection with issuance of 2026 convertible notes

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The Company’s product pipeline candidates provide differentiated drug delivery solutions that reduce the complexity and burden of the current standard of care by creating local programmed-release alternatives.

Since inception, the Company’s operations have been primarily focused on organizing and staffing the Company, acquiring rights to intellectual property, business planning, raising capital, developing its technology, identifying potential product candidates, undertaking preclinical studies and clinical trials, manufacturing initial quantities of its products and product candidates and building the initial sales and marketing infrastructure for the commercialization of the Company’s approved products and product candidates and launching its initial product.

Since inception, the Company’s operations have been primarily focused on organizing and staffing the Company, acquiring rights to intellectual property, business planning, raising capital, developing its technology, identifying product candidates, undertaking preclinical studies and clinical trials, manufacturing initial quantities of its products and product candidates and building the initial sales and marketing infrastructure for the commercialization of the Company’s approved products and product candidates and launching its initial product.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations, regulatory approval and compliance, reimbursement, uncertainty of market acceptance of products and the need to obtain additional financing.

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DEXTENZA® (dexamethasone insert) 0.4mg, an intracanalicular insert for the treatment of post-surgical ocular inflammation and pain and ReSure® Sealant, an ophthalmic device designed to prevent wound leaks in corneal incisions following cataract surgery.

While ReSure Sealant is commercially available in the United States, it does not receive sales support and has not in the past generated, nor is it anticipated to in the future to generate, material revenues.

The Company’s other product candidates are in clinical stage development.

In October 2021, DEXTENZA received approval for the treatment of ocular itching associated with allergic conjunctivitis.

While ReSure Sealant is commercially available in the United States, it does not receive sales support, is not currently being manufactured by the Company, and has not in the past generated, nor is it anticipated to in the future to generate, material revenues.

The Company’s most advanced product candidates are in either Phase 1 or Phase 2 of clinical stage development.

There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval and adequate reimbursement or that any approved products will be commercially viable.

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As of December 31, 2021, the Company had an accumulated deficit of $ 545,804 .

The Company believes that its existing cash and cash equivalents of $ 228,057 , as of December 31, 2020, along with its current operating plan, which includes revenues from the sale of DEXTENZA, will enable it to fund its planned operating expenses, debt service obligations and capital expenditure requirements through at least the next 12 months.

The Company believes that its existing cash and cash equivalents of $ 164,164 , as of December 31, 2021, along with its current operating plan, which includes revenues from the sale of DEXTENZA, will enable it to fund its planned operating expenses, debt service obligations and capital expenditure at least through the next 12 months.

The future viability of the Company beyond that point is dependent on its ability to generate cash flows from the sale of DEXTENZA and raise additional capital to finance its operations.

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Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all.

If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs for product candidates, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and

development programs for product candidates, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

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Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiary.

The accompanying consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries.

All intercompany accounts and transactions have been eliminated.

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(i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company only applies the five-step model to arrangements that meet the definition of a contract with a customer under Topic 606, including when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the

scope of Topic 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct.

Company only applies the five-step model to arrangements that meet the definition of a contract with a customer under Topic 606, including when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

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Product Revenue, Net — The Company derives its product revenues from the sale of DEXTENZA in the United States to customers, which includes a limited number of specialty distributors, who then subsequently resell DEXTENZA to physicians, clinics and certain medical centers or hospitals.

In addition to distribution agreements with customers, the Company enters into arrangements with government payers that provide for government mandated rebates and chargebacks with respect to the purchase of DEXTENZA.

In addition to distribution agreements with customers, the Company enters into arrangements with government payors that provide for government mandated rebates and chargebacks with respect to the purchase of DEXTENZA.

The Company recognizes revenue on product sales when the customer obtains control of the Company's product, which occurs at a point in time (upon delivery to the customer).

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Government Chargebacks — Chargebacks for fees and discounts to qualified government healthcare providers represent the estimated obligations resulting from contractual commitments to sell products to qualified U.S.

of Veterans Affairs hospitals and 340B entities at prices lower than the list prices charged to customers who directly purchase the product from the Company.

Department of Veterans Affairs hospitals and 340B entities at prices lower than the list prices charged to customers who directly purchase the product from the Company.

The 340B Drug Discount Program is a U.S.

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The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as an accrued expenses and other current liabilities on the consolidated balance sheets.

Other Incentives — Other incentives which the Company offers include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payers.

The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period.

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(i) the arrangement has been approved by the parties and the parties are committed to perform their respective obligations;

(ii) each party’s rights regarding the goods and/or services to be transferred can be identified;

(ii) each party’s rights regarding the goods and/or services to be transferred can be

(iii) the payment terms for the goods and/or services to be transferred can be identified;

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and (v) collection of substantially all of the consideration to which the Company will be entitled in exchange for the goods and/or services that will be transferred to the customer is probable.

The Company also

determines the term of the contract based on the period in which the Company and its customer have present and enforceable rights and obligations for purposes of identifying the performance obligations and determining the transaction price.

The Company also determines the term of the contract based on the period in which the Company and its customer have present and enforceable rights and obligations for purposes of identifying the performance obligations and determining the transaction price.

The Company evaluates contracts that contain multiple promises to determine which promises are distinct.

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The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis.

The Company performs an assessment of the recoverability of capitalized inventory during each

reporting period, and it writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment is first identified.

The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment is first identified.

Such impairment charges, should they occur, are recorded within cost of product revenue.

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The Company is dependent on a small number of third-party manufacturers to supply products for research and development activities in its preclinical and clinical programs and for sales of its products.

The Company’s development programs as well as revenue from future sales of its product sales could be adversely affected by a significant interruption in the supply of any of the components of these products.

For the year ended December 31, 2020, three specialty distributor customers accounted for 42 %, 29 % and 12 % of the Company’s total revenue and three specialty distributor customers accounted for 45 %, 33 % and 15 % of the

Company’s total accounts receivable.

The Company’s development

programs as well as revenue from future sales of its product sales could be adversely affected by a significant interruption in the supply of any of the components of these products.

For the year ended December 31, 2021, three specialty distributor customers accounted for 42 %, 26 % and 17 % of the Company’s total revenue and three specialty distributor customers accounted for 42 %, 26 % and 21 % of the Company’s total accounts receivable.

No other customer accounted for more than 10% of total revenue or accounts receivable for the year ended December 31, 2021.

For the year ended December 31, 2019, two specialty distributor customers accounted for 27 % and 11 % of the Company’s total revenue and three specialty distributor customers accounted for 39 %, 18 % and 11 % of the Company’s total accounts receivable.

No other customer accounted for more than 10% of total revenue or accounts receivable for the year ended December 31, 2020.

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The fair value of the 2026 Convertible Notes was estimated utilizing a binomial lattice model which requires the use of Level 3 unobservable inputs.

The main input when determining the fair value of the 2026 Convertible Notes is the bond yield that pertains to the host instrument without the conversion option.

The significant assumption used in determining the bond yield is the market yield movements of a comparable instrument issued as of the valuation date, which is assessed and updated each period.

The main input when determining the fair value for disclosure purposes is the bond yield which is updated each period to reflect the yield of a comparable instrument issued as of the valuation date.

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The entire embedded conversion option is required to be separated from the 2026 Convertible Notes and accounted for as a freestanding derivative instrument subject to derivative accounting.

The main input when determining the fair value of the 2026 Convertible Notes is the bond yield that pertains to the host instrument without the conversion option.

The significant assumption used in determining the bond yield is the market yield movements of a comparable instrument issued as of the valuation date, which is assessed and updated each period.

Therefore, the entire conversion option is bifurcated from the underlying debt instrument and accounted for and valued separately from the host instrument.

The Company measures the value of the embedded conversion option at its estimated fair value and recognizes changes in the estimated fair value in other income (expense), net in the consolidated statements of operations and comprehensive loss

during the period of change.

The embedded conversion is recognized as a derivative liability in the Company’s consolidated balance sheet.

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Upon retirement or sale, the cost and related accumulated depreciation of assets disposed of are removed from the accounts and any resulting gain or loss is included in loss from operations.

Impairment of Long-Lived Assets

Long-lived assets consist of property and equipment.

Impairment of Long-Lived Assets and Right of Use Assets

Long-lived assets consist of property and equipment and right-of-use assets.

Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.

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Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period.

Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to

reallocate undistributed earnings based on the potential impact of dilutive securities, including the assumed conversion of the Company’s 2026 Convertible Notes, outstanding stock options and common stock warrants, except where the result would be anti-dilutive.

Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities, including the assumed conversion of the Company’s 2026 Convertible Notes, outstanding stock options and common stock warrants, except where the result would be anti-dilutive.

Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of the conversion of the 2026 Convertible Notes, the exercise of outstanding stock options and common stock warrants.

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Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the existing disclosure requirements for fair value measurements.

The new disclosure requirements include disclosure related to changes in unrealized gains or losses included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of each reporting period and the explicit requirement to disclose the range and weighted average of significant unobservable inputs used for Level 3 fair value measurements.

The other provisions of ASU 2018-13 include eliminated and modified disclosure requirements.

In November 2018, the FASB issued ASU No.

2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic 606 (“ASU 2018-18”).

ASU 2018-18 makes targeted improvements to GAAP for collaborative arrangements, including (i) clarification that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account, (ii) adding unit-of-account guidance in ASC 808, Collaborative Arrangements, to align with the guidance in ASC 606 and (iii) a requirement that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under ASC 606 is precluded if the collaborative arrangement participant is not a customer.

The Company adopted this pronouncement as required effective January 1, 2020 and its adoption did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No.

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The guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company is currently evaluating the impact that the adoption of ASU 2019-12 will have on its consolidated financial statements.

The Company adopted this accounting pronouncement as required effective January 1, 2021 and its adoption did not have a material impact on the consolidated financial statements.

In June 2016, the FASB issued ASU No.

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ASU 2019-05 provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis.

For public entities that are Securities and Exchange Commission filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.

For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

This standard will be effective for the Company on January 1, 2023.

The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

The Company adopted this accounting pronouncement as required and its adoption did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU No.

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The FASB also specified that an entity should adopt the guidance as of the beginning of its fiscal year and is not permitted to adopt the guidance in an interim period.

The Company is assessing the potential impact of ASU 2020-06 on its consolidated financial statements.

The Company is assessing the potential impact of ASU 2020-06 and does not expect it to have a material impact on its consolidated financial statements.

Fair Value of Financial Assets and Liabilities

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Balance at December 31, 2019

Initial value

Change in fair value

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Each 2026 Convertible Note accrues interest at an annual rate of 6 % of its outstanding principal amount, which is payable, along with the principal amount at maturity, on March 1, 2026, unless earlier converted, repurchased or redeemed.

The Company presents deferred interest in accrued current liabilities because the notes are currently convertible and the interest is payable in cash.

The Company presents accrued interest in accrued current liabilities because the notes are currently convertible and the interest is payable in cash.

The effective annual interest rate for the 2026 Convertible Notes was 14.8 % through December 31, 2021.

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Upon conversion by the holder, the Company has the right to select the settlement of the conversion in either shares of common stock, cash, or in a combination thereof.

In addition, the Company is obligated to make a cash

payment to the holder of such 2026 Convertible Note for any interest accrued but unpaid on the principal amount converted.

In addition, the Company is obligated to make a cash payment to the holder of such 2026 Convertible Note for any interest accrued but unpaid on the principal amount converted.

● If the Company elects to satisfy such conversion by shares of common stock, the Company shall deliver to the converting holder in respect of each $ 1,000 principal amount of 2026 Convertible Notes being converted a number of common shares equal to the conversion rate in effect on the conversion date;

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The “Daily Settlement Amount” is defined as, for each of the 20 consecutive trading days during the specified period:

(a) cash in an amount equal to the lesser of (i) the Daily Measurement Value (as defined below) and (ii) the Daily Conversion Value on such Trading Day;

(a) cash in an amount equal to the lesser of (i) the Daily Measurement Value (as defined below) and (ii) the Daily Conversion Value on such

and (b) if the Daily Conversion Value on such trading day exceeds the Daily Measurement Value, a number of Shares equal to (i) the difference between the Daily Conversion Value and the Daily Measurement Value, divided by (ii) the Daily VWAP for such Trading Day.

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The allocation of proceeds to the conversion option results in a discount on the 2026 Convertible Notes.

Company is amortizing the discount to interest expense over the term of the 2026 Convertible Notes using the effective interest method.

The Company is amortizing the discount to interest expense over the term of the 2026 Convertible Notes using the effective interest method.

A summary of the 2026 Convertible Notes at December 31, 2021 and 2020 is as follows:

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unamortized discount

Accrued interest

Property and Equipment, net

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AffaMed License Agreement

On October 29, 2020, the Company entered into license agreement (“License Agreement”) with AffaMed Therapeutic Limited (“AffaMed”) for the development and commercialization of the Company’s DEXTENZA product regarding ocular inflammation and pain following cataract surgery and allergic conjunctivitis (collectively, the “DEXTENZA Field”) and for the Company’s OTX-TIC product candidate (collectively with DEXTENZA, the “AffaMed Licensed Products”) regarding open-angle glaucoma and ocular hypertension (collectively, the “TIC Field” and, with the DEXTENZA Field, each a “Field”), in each case in mainland China, Taiwan, Hong Kong, Macau, South

Korea, and the countries of the Association of Southeast Asian Nations (collectively, the “Territories”).

On October 29, 2020, the Company entered into license agreement (“License Agreement”) with AffaMed Therapeutic Limited (“AffaMed”) for the development and commercialization of the Company’s DEXTENZA product regarding ocular inflammation and pain following cataract surgery and allergic conjunctivitis (collectively, the “DEXTENZA Field”) and for the Company’s OTX-TIC product candidate (collectively with DEXTENZA, the “AffaMed Licensed Products”) regarding open-angle glaucoma or ocular hypertension (collectively, the “TIC Field” and, with the DEXTENZA Field, each a “Field”), in each case in mainland China, Taiwan, Hong Kong, Macau, South Korea, and the countries of the Association of Southeast Asian Nations (collectively, the “Territories”).

The Company retains development and commercialization rights for the AffaMed Licensed Products in the rest of the world.

Under the License Agreement, the Company received a non-refundable upfront payment of $ 12,000 in December 2020.

Under the License Agreement, the Company received a non-refundable upfront payment of $ 12,000 in December 2020 and additional $ 1,000 milestone in the fourth quarter of 2021.

The Company is also eligible to receive up to an additional $ 90,000 in aggregate, inclusive of a low-seven-figure clinical support payment, upon the achievement of certain regulatory, development and commercial milestones.

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● the license, regulatory filings and manufacturing of DEXTENZA;

● the license, regulatory filings and manufacturing for the Company’s OTX-TIC product candidate regarding open-angle glaucoma and ocular hypertension in the Territories;

● the license, regulatory filings and manufacturing for the Company’s OTX-TIC product candidate regarding open-angle glaucoma or ocular hypertension in the Territories;

● obligations to participate on various joint research, development and project committees;

● the conduct of a Phase 2 clinical trial of OTX-TIC

The Company has concluded there is a combined performance obligation for a development and commercialization license and manufacturing obligations for DEXTENZA Field and the Company’s OTX-TIC product candidate regarding open-angle glaucoma and ocular hypertension in the Territories.

Territories without receipt of supply as the development and commercialization license does not convey to AffaMed the right to manufacture and therefore the Company has combined the development and commercialization license and the manufacturing obligations into one performance obligation.

Further, AffaMed cannot exploit the value of the development and commercialization license for DEXTENZA Field and the Company’s OTX-TIC product candidate regarding open-angle glaucoma or ocular hypertension in the Territories without receipt of supply as the development and commercialization license does not convey to AffaMed the right to manufacture and therefore the Company has combined the development and commercialization license and the manufacturing obligations into one performance obligation.

The Company has concluded that the right of AffaMed to opt into the Global Studies for DEXTENZA and OTX-TIC are options that do not convey a material right to AffaMed.

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This estimate of this period considers the timing of development and commercial activities under the License Agreement and may be reduced or increased based on the various activities as directed by the joint committees, decisions made by AffaMed, regulatory feedback or other factors not currently known.

The Company has not recognized any revenue under the License Agreement as of December 31, 2020 as there has not been any delivery of product under the License Agreement.

The Company has not recognized any revenue under the License Agreement as of December 31, 2021 and 2020 as there has been an insignificant amount of delivery of product under the License Agreement.

The Company does not expect to recognize material revenue from the License Agreement in 2022.

The entire transaction price is recorded as deferred revenue as of December 31, 2020.

The entire transaction price is recorded as deferred revenue as of December 31, 2021 and 2020.

Regeneron Collaboration Agreement

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(“Regeneron”) for the development and potential commercialization of products using the Company’s hydrogel in combination with Regeneron’s large molecule VEGF-targeting compounds for the treatment of retinal diseases.

The Collaboration Agreement does not cover the development of any product candidates that deliver small molecule drugs, including TKIs for any target including VEGF, or any product candidate that delivers large molecule drugs other than those that target VEGF proteins.

Under the terms of the Collaboration Agreement, the Company and Regeneron have agreed to conduct a joint research program with the aim of developing a sustained-release formulation of aflibercept, currently marketed under the tradename Eylea, that is suitable for advancement into clinical development.

The Company has granted Regeneron an option (the “Option”) to enter into an exclusive, worldwide license to develop and commercialize products using the Company’s hydrogel in combination with Regeneron’s large molecule VEGF-targeting compounds (“Licensed

Under the term of the Collaboration Agreement, Regeneron is responsible for funding an initial preclinical tolerability study.

If Regeneron decided to exercise the Option, Regeneron will be obligated to conduct further preclinical development and an initial clinical trial under a collaboration plan.

The Company is obligated to reimburse Regeneron for certain development costs incurred by Regeneron under the collaboration plan during the period through the completion of the initial clinical trial, subject to a cap of $ 25,000 , which cap may be increased by up to $ 5,000 under certain circumstances.

If Regeneron elects to proceed with further development following the completion of the collaboration plan, it will be solely responsible for conducting and funding further development and commercialization of product candidates.

If the Option is exercised, Regeneron is required to use commercially reasonable efforts to research, develop and commercialize at least one Licensed Product.

Such efforts shall include initiating the dosing phase of a subsequent clinical trial within specified time periods following the completion of the first-in-human clinical trial or the initiation of preclinical toxicology studies, subject to certain extensions.

Under the terms of the Collaboration Agreement, Regeneron has agreed to pay the Company $ 10,000 upon the exercise of the Option.

The Company is also eligible to receive up to $ 145,000 per Licensed Product upon the achievement of specified development and regulatory milestones, $ 100,000 per Licensed Product upon first commercial sale of such Licensed Product and up to $ 50,000 based on the achievement of specified sales milestones for all Licensed Products.

In addition, the Company is entitled to tiered, escalating royalties, in a range from a high-single digit to a low-to-mid teen percentage of net sales of Licensed Products.

In December 2017, the Company delivered to Regeneron a proposed final formulation for the initial preclinical tolerability study.

Regeneron initiated the preclinical study in early 2018.

The Company and Regeneron subsequently reached an understanding that the proposed formulation was not final and ceased development of it.

On August 5, 2021, Regeneron notified the Company of its termination of the Collaboration Agreement.

The termination became effective immediately.

Under the terms of the Collaboration Agreement, the Company and Regeneron had agreed to conduct a joint research program with the aim of developing a sustained-release formulation of aflibercept, currently marketed under the tradename Eylea, that is suitable for advancement into clinical development.

The Company had granted Regeneron an option (the “Option”) to enter into an exclusive, worldwide license to develop and commercialize products using the Company’s hydrogel in combination with Regeneron’s large molecule VEGF-targeting compounds (“Licensed Products”).

Under the term of the Collaboration Agreement, Regeneron was responsible for funding an initial preclinical tolerability study.

In connection with the termination of the Collaboration Agreement, all licenses, options and other rights granted to either party under the Collaboration Agreement automatically terminated, other than the surviving joint intellectual property rights described below.

The Company and Regeneron also became obligated to undertake certain transition activities upon the termination, including the return of specified property of the other party.

Each party retains an equal, undivided ownership interest, which may be transferred, licensed and otherwise exploited without a duty to account to the other party, in certain intellectual property rights jointly developed under the collaboration.

As a result of the termination, the Company is no longer eligible to receive (i) reimbursement from Regeneron for ongoing research and development activities, (ii) a fee upon exercise of the Option, (iii) payments upon the achievement

of specified development and regulatory milestones of the Regeneron Licensed Products, or (iv) tiered, escalating royalties in a range from a high-single digit to a low-to-mid teen percentage of net sales of Regeneron Licensed Products, in each case pursuant to the Collaboration Agreement.

The Company is also no longer obligated to reimburse Regeneron for certain development costs, up to an aggregate amount of $ 30,000 in certain circumstances, were Regeneron to have exercised the Option.

On May 8, 2020, the Company entered into an amendment (the “Regeneron Amendment”) to the Collaboration Agreement.

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As amended, the Option is exclusive for twenty-four months following May 8, 2020.

Through December 31, 2020, the Option has not been exercised, and no payments have been made.

As of December 31, 2020, the Company has recorded $ 1,256 related to work performed for preclinical development activities in connection with the revised work plan which the Company has recorded as a reduction of research and development expense as this research is not an output of the Company’s ordinary business activities.

As of December 31, 2020, the Company has included the $ 1,256 in prepaid expenses and other current assets.

As of December 31, 2021 and 2020, the Company had recorded $ 768 and $ 1,256 related to work performed for preclinical development activities in connection with the revised work plan which the Company has recorded as a reduction of research and development expense as this research is not an output of the Company’s ordinary business activities.

As of December 31, 2021 and 2020, the Company had included the $ 0 and $ 1,256 in prepaid expenses and other current assets.

Notes Payable

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The Company was required to make interest-only payments under the Credit Facility until December 2020.

Commencing in January 2021, the Company is required to make 36 equal monthly installments of principal in the amount of $ 694 , plus interest, through December 2023.

Amounts borrowed under the Credit Agreement are at LIBOR base rate, subject to 2.00 % floor, plus 7.25 % .

Commencing in January 2021, the Company was required to make 36 equal monthly installments of principal in the amount of $ 694 , plus interest, through December 2023.

Amounts borrowed under the Credit Facility were at LIBOR base rate, subject to 2.00 % floor, plus 7.25 %.

Prior to the Fourth Amendment (as defined below), the interest rate was 9.25 %.

The exit fee equal to 3.5 %, or $ 429 that was previously accrued, has been paid.

In June 2021, the Company entered into a Fourth Amended and Restated Credit and Security Agreement (the “Fourth Amendment”) to amend the terms of its debt with existing lenders for total indebtedness of $ 20,833 and borrowed an incremental $ 4,167 , for a total of $ 25,000 (the “2021 Amended Credit Facility”).

The Company is required to make interest-only payments under the 2021 Amended Credit Facility through April 2024.

Commencing in May 2024, the Company is required to make 19 equal monthly installments of principal in the amount of $ 1,042 , plus interest, then on the maturity date, November 30, 2025 the remaining balance of $ 5,208 plus the exit fee.

In the event the Company achieves certain milestones under the 2021 Amended Credit Facility, the Company has the right to extend through April 1, 2026 and make 5 equal monthly installments of principal in the amount of $ 1,042 , plus interest.

The Company has not assumed the achievement of these milestones for purposes of disclosures herein.

Amounts borrowed under the 2021 Amended Credit Facility are at LIBOR base rate, subject to 1.00 % floor, plus 6.75 %.

The interest rate on the date of the amendment was 8.8 %.

As of December 31, 2020, the interest rate was 9.25 % .

In addition, a final payment (exit fee) equal to 3.5 % of amounts drawn under the Credit Facility, or $ 875 based on

borrowings of $ 25,000 , is due upon the maturity date of December 21, 2023.

The Company is accruing the exit fee through December 21, 2023.

On August 2, 2019, the Company entered into a second amendment to the Credit Agreement in which the lenders agreed to remove the financial covenant requiring the Company to maintain a minimum of $ 5,000 of cash on hand.

Prior to this amendment, the Company was required to maintain a minimum of $ 5,000 of cash on hand as a financial covenant to the borrowing arrangement, which the Company had included in long-term restricted cash.

There are no other financial covenants associated with the Credit Agreement.

However, there are negative covenants restricting the Company’s activities, including limitations on dispositions, mergers or acquisitions;

In addition, a final payment (exit fee) equal to 3.5 % of amounts drawn under the Amended Credit Facility, or $ 875 based on borrowings of $ 25,000 , is due upon the maturity date of November 30, 2025.

The Company is accruing the exit fee through November 30, 2025.

The Company accounted for the Fourth Amendment as a modification in accordance with the guidance in ASC 470-50, Debt.

Amounts paid to the lenders were recorded as debt discount and a new effective interest rate was established.

The effective annual interest rate of the outstanding debt under the Fourth Amendment is 8.8 % .

There are no financial covenants associated with the Fourth Amendment.

However, the Fourth Amendment does contain negative covenants restricting the Company’s activities, including limitations on dispositions, mergers or acquisitions;

encumbering its intellectual property;

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paying dividends;

making certain investments;

making certain

and engaging in certain other business transactions.

As of December 31, 2020, the Company is not in violation of any of the covenants.

The obligations under the Credit Agreement are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in the Company’s business, operations or financial or other condition.

As of December 31, 2021, the Company was not in violation of any of its covenants under the Fourth Amendment.

The obligations under the Fourth Amendment are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in the Company’s business, operations or financial or other condition.

The debt is collateralized by substantially all of the Company’s assets, including its intellectual property.

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Long-term notes payable

As of December 31, 2020, the annual repayment requirements for the Credit Facility, inclusive the final payment of $ 875 due at expiration, were as follows:

As of December 31, 2021, the annual repayment requirements for the Credit Facility, inclusive of the final payment of $ 875 due at expiration, were as follows:

Year Ending December 31,

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Upon the closing of the Company’s IPO in July 2014, the preferred stock warrants became warrants to purchase an aggregate of 37,878 shares of its common stock with an exercise price of $ 7.92 per share, with Silicon Valley Bank and MidCap Financial SBIC, LP., each holding warrants of 18,939 shares of common stock.

The Company had warrants for the purchase of 18,939 shares of common stock outstanding with MidCap Financial SBIC, LP at December 31, 2020 and 2019 at a weighted average exercise price of $ 7.92 per share and an expiration date of April 17, 2021.

On January 29, 2021, holders of warrants to purchase 18,939 shares of common stock at an exercise price of $ 7.92 exercised their right to purchase their warrants.

The exercise price of the warrants was paid through a net share settlement mechanism and as a result the Company issued 11,737 shares of common stock to satisfy the exercise of all the warrants.

There are no warrants outstanding as of December 31, 2021.

The Company had warrants for the purchase of 18,939 shares of common stock outstanding with MidCap Financial SBIC, LP at December 31, 2020 at a weighted average exercise price of $ 7.92 per share and an expiration date of April 17, 2021.

Preferred Stock

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Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

In June 2021, the Company adopted an amended and restated certificate of incorporation increasing the number of its authorized shares of its common stock to 200,000,000 shares.

On August 9, 2021, the Company and Jefferies mutually terminated the 2019 Sales Agreement and entered into another Open Market Sale Agreement (the “2021 Sales Agreement”) under which the Company may offer and sell shares of common stock of the Company having an aggregate offering price of up to $ 100,000 from time to time through Jefferies, acting as agent.

As of February 27, 2022, the Company has no t sold any shares of common stock under the 2021 Sales Agreement.

On December 14, 2020, the Company entered into an underwriting agreement with Jefferies LLC (“Jefferies”) and Piper Sandler & Co.

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In the twelve months ended December 31, 2020, the Company sold 2,984,381 shares of common stock under the 2019 Sales Agreement, resulting in net proceeds of approximately $ 14,359 , respectively, after commissions and expenses.

From inception through March 1, 2021, the Company sold an aggregate of 10,321,840 shares of common stock under the 2019 Sales Agreement, resulting in net proceeds of approximately $ 46,985 after commissions and expenses.

The Company has $ 1,326 available for issuance as of March 1, 2021.

In November 2016, the Company entered into a controlled equity offering sales agreement, (the “2016 Sales Agreement”) with Cantor Fitzgerald & Co., (“Cantor”), under which the Company may offer and sell its common stock having aggregate proceeds of up to $ 40,000 may be sold from time to time.

During the year ended December 31, 2018, the Company sold 4,121,173 shares of common stock under the 2016 Sales Agreement, resulting in net proceeds of approximately $ 26,824 after underwriting discounts, commissions and expenses.

Through December 31, 2018, the Company had sold 5,011,741 shares of common stock under the 2016 Sales Agreement, resulting in net proceeds of

approximately $ 33,427 after underwriting discounts, commissions and expenses.

In the three months ended March 31, 2019, the Company sold 1,318,481 shares of common stock under the 2016 Sales Agreement, resulting in net proceeds of approximately $ 4,954 after underwriting discounts and commissions and expenses.

As of February 25, 2019, the Company had no amounts remaining available for future sale under the 2016 Sales Agreement.

On February 28, 2019, pursuant to the 2016 Sales Agreement, the Company delivered a termination notice to Cantor, terminating the 2016 Sales Agreement.

Through March 31, 2019, the Company sold 6,330,222 shares of common stock under the 2016 Sales Agreement, resulting in net proceeds of approximately $ 38,381 after underwriting discounts and commissions and expenses.

As of December 31, 2020, the Company had reserved 11,191,284 shares of common stock for the exercise of outstanding stock options and the number of shares remaining available for grant under the Company’s 2014 Stock Incentive Plan (the “2014 Plan”) and the 2019 Inducement Stock Incentive Plan (the “2019 Inducement Plan”), the number of shares available for issuance under the 2014 Employee Stock Purchase Plan (Note 13), and the outstanding warrants to purchase common stock (Note 10).

As of December 31, 2021, the Company had reserved 10,934,828 shares of common stock for the exercise of outstanding stock options and the number of shares remaining available for grant under the Company’s 2021 Stock Incentive Plan (the “2021 Plan”), 2014 Stock Incentive Plan (the “2014 Plan”) and the 2019 Inducement Stock Incentive

Plan (the “2019 Inducement Plan”), and the number of shares available for issuance under the 2014 Employee Stock Purchase Plan (Note 13).

Stock-Based Awards

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On January 1, 2021, the number of shares available for issuance under the 2014 Plan increased by 1,659,218 .

On June 18, 2021, the Company’s stockholders approved the adoption of the 2021 Plan previously approved by the board of directors.

Effective as of the adoption of the 2021 Plan by the Company’s stockholders, no new awards will be granted under the 2014 Plan.

However, as of December 31, 2021, all then-outstanding awards under the 2014 Plan remained in effect and continued to be governed by the terms of the 2014 Plan.

2021 Stock Incentive Plan

The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based awards.

The number of shares of common stock that may be issued under the 2021 Plan is 6,000,000 shares of common stock;

plus 456,334 shares remaining available for grant under the 2014 Plan as of immediately prior to the effective date of the 2021 Plan and 9,766,336 shares subject to awards granted under the 2014 Plan or the Company’s 2006 Stock Incentive Plan, which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject to certain limitations).

As of December 31, 2021, 6,263,365 shares remained available for issuance under the 2021 Plan.

As required by the 2006 Plan and 2014 Plan, the exercise price for stock options granted is not to be less than the fair value of common shares as of the date of grant.

As required by the 2006 Plan, 2014 Plan and 2021 Plan, the exercise price for stock options granted is not to be less than the fair value of common shares as of the date of grant.

Inducement Stock Option Awards

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The 2019 Inducement Plan provides for the following types of awards, each of which is referred to as an “Award”:

non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.

Awards under the 2019 Inducement Plan may only be granted to persons who (a) were not previously an employee or

director of the Company or (b) are commencing employment with the Company following a bona fide period of non-employment, in either case as an inducement material to the individual’s entering into employment with the Company and in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4).

statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.

Awards under the 2019 Inducement Plan may only be granted to persons who (a) were not previously an employee or director of the Company or (b) are commencing employment with the Company following a bona fide period of non-employment, in either case as an inducement material to the individual’s entering into employment with the Company and in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4).

For the avoidance of doubt, neither consultants nor advisors shall be eligible to participate in the 2019 Inducement Plan.

Each person who is granted an Award under the 2019 Inducement Plan is deemed a “Participant.”

On February 1, 2021, the Company issued to the Senior Vice President, Clinical Development, a non-statutory stock option to purchase an aggregate of 100,000 shares of its common stock at an exercise price of $ 18.70 per share subject to a time-based vesting and a non-statutory stock option to purchase 50,000 shares of its common stock at an exercise price of $ 18.70 per share subject to performance-based vesting.

The stock option was issued under the Company’s 2019 Inducement Plan as an inducement material to such individual’s acceptance of an offer of employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

Subject to her continued service to the Company, the time-based stock option will vest over a four-year period, with 25 % of the shares underlying the option award vesting on the one-year anniversary of the grant date and the remaining 75 % of the shares underlying the award vesting monthly thereafter.

The performance-based stock option vests and becomes exercisable in whole or in part if the Company achieves specified milestones, subject to continued service to the Company through the applicable vesting dates.

The stock options are subject to the terms and conditions of stock option agreements covering the grant and the Company’s 2019 Inducement Plan, as amended to date.

On December 10, 2020, the Board of Directors of the Company amended the 2019 Inducement Plan to increase the aggregate number of shares issuable by 554,000 shares of common stock to 1,054,000 .

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Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

As of December 31, 2020, there were no outstanding unvested service-based stock options held by nonemployees.

As of December 31, 2021, there were 27,903 outstanding unvested service-based stock options held by nonemployees.

The assumptions that the Company used to determine the fair value of the stock options granted to employees and directors are as follows, presented on a weighted average basis:

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Net loss per share - basic and diluted

For the year ended December 31, 2020 and 2019, there is no dilutive impact.

Therefore, diluted net loss per share is the same as basic net loss per share.

Basic and diluted net loss per share was calculated as follows for the year ended December 31, 2021:

Year Ended December 31,

Net loss attributable to common stockholders, basic

Interest expense on 2026 Convertible Notes

Change in fair value of derivative liability

Net loss attributable to common stockholders, diluted

Weighted average common shares outstanding, basic

Shares issuable upon conversion of 2026 Convertible Notes, as if converted

Weighted average common shares outstanding, diluted

Net loss per share attributable to common stockholders, basic

Net loss per share attributable to common stockholders, diluted

The Company excluded the following common stock equivalents, outstanding as of December 31, 2021, 2020 and 2019 from the computation of diluted net loss per share attributable to common stockholders for the years ended December 31, 2021, 2020 and 2019 because they had an anti-dilutive impact due to the net loss incurred for the periods.

Company also excluded the shares issuable upon conversion of the 2026 Convertible Notes from the computation of diluted net loss per share for the year ended December 31, 2020 and 2019 because they had an anti-dilutive impact.

The Company also excluded the shares issuable upon conversion of the 2026 Convertible Notes from the computation of diluted net loss per share for the year ended December 31, 2020 and 2019 because they had an anti-dilutive impact.

Options to purchase common stock

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Under the Incept License, as amended and restated, the Company was granted a worldwide, perpetual, exclusive license to develop and commercialize products that are delivered to or around the human eye for diagnostic, therapeutic or prophylactic purposes relating to ophthalmic diseases or conditions.

The Company is obligated to pay low single-digit royalties on net sales of commercial products developed using the licensed technology, commencing with the date of the first commercial sale of such products and until the expiration of the last to expire of the patents covered by the license.

The Company is obligated to pay low single-digit royalties on net sales of commercial products developed using the licensed technology, commencing with

the date of the first commercial sale of such products and until the expiration of the last to expire of the patents covered by the license.

Any of the Company’s sublicensees also will be obligated to pay Incept a royalty equal to a low single-digit percentage of net sales made by it and will be bound by the terms of the agreement to the same extent as the Company.

The Company is obligated to reimburse Incept for its share of the reasonable fees and costs incurred by Incept in connection with the prosecution of the patent applications licensed to the Company under the Incept License.

Through December 31, 2020, royalties paid under this agreement related to product sales were $ 575 and have been charged to cost of product revenue.

From inception through December 31, 2021, royalties paid under this agreement related to product sales were $ 1,908 and have been charged to cost of product revenue.

On September 13, 2018, the Company entered into a second amended and restated license agreement (the “Second Amended Agreement”) with Incept.

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As of December 31, 2021, the Company was not aware of any claims that could have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2021.

Collaboration Agreement

On October 10, 2016, the Company entered into a Collaboration Agreement with Regeneron which the parties amended in May 2020 (Note 8).

If the Option to enter into an exclusive worldwide license is exercised, Regeneron will be obligated to conduct further preclinical development and an initial clinical trial under a collaboration plan.

the timing of such payments are not known.

If the Option is exercised, Regeneron is required to use commercially reasonable efforts to research, develop and commercialize at least one Licensed Product.

Such efforts shall include initiating the dosing phase of a subsequent

clinical trial within specified time periods following the completion of the first-in-human clinical trial or the initiation of preclinical toxicology studies, subject to certain extensions.

The Company leases real estate, including laboratory, manufacturing and office space.

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The lease term commenced on February 1, 2017 and will expire on July 31, 2027.

The Company has the option to extend the for two additional periods of five years by delivering written notice of the exercise not earlier than fifteen months nor later than 12 months before expiration of the original term.

The Company has the option to extend the lease for two additional periods of five years each by delivering written notice of the exercise not earlier than fifteen months nor later than 12 months before expiration of the original term.

On April 4, 2019, the Company entered into a non-cancelable lease for 30,036 square feet of space located at 24 Crosby Drive in Bedford, Massachusetts to be used for office space.

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As of December 31, 2021, the Company also had available research and development tax credit carryforwards for federal and state income tax purposes of $ 10,898 and $ 6,142 , respectively, which begin to expire in 2026 and 2025, respectively.

Utilization of the NOL carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that have occurred previously or that could occur in the future.

Utilization of the NOL carryforwards and research and development tax credit carryforwards may be subject to a substantial annual

limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that have occurred previously or that could occur in the future.

These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income.

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The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets.

Management considered the Company’s cumulative net losses and concluded that it is more likely than not that

the Company would not realize the benefits of the deferred tax assets.

Management considered the Company’s cumulative net losses and concluded that it is more likely than not that the Company would not realize the benefits of the deferred tax assets.

Accordingly, a full valuation allowance was established against the net deferred tax assets as of December 31, 2021, 2020 and 2019.

The Company has not recorded any amounts for unrecognized tax benefits as of December 31, 2020 or 2019.

The Company has no t recorded any amounts for unrecognized tax benefits as of December 31, 2021, 2020 or 2019.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

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Company contributions to the plan may be made at the discretion of the board of directors.

Through December 31, 2020, no contributions have been made to the plan by the Company.

Through December 31, 2021, the Company has made contributions of $ 493 made to the plan by the Company.

Related Party Transactions

Since October 2017, the Company has engaged McCarter English LLP (“McCarter”) to provide legal services to the Company, including with respect to intellectual property matters.

Sparks, Ph.D., a partner at McCarter & English, has also served in the capacity as the Company’s in-house counsel from October 2017 through August 31, 2020.

Sparks, Ph.D., a partner at McCarter & English, served in the capacity as the Company’s in-house counsel from October 2017 through August 31, 2020.

The Company incurred fees for legal services rendered by McCarter of $ 766 and $ 1,119 for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020 and 2019, there was $ 47 and $ 107 recorded in accounts payable for McCarter.

As of December 31, 2020 and 2019, there was $ 0 and $ 242 recorded in accrued expenses for McCarter.

Restructuring and Other Costs

On November 6, 2019, the Board of Directors approved an operational restructuring to eliminate a portion of the Company’s workforce to reduce expenses.

As part of this operational restructuring, the Company reduced headcount by approximately 22 % .

The Company completed the restructuring in the fourth quarter of 2019 and recorded total restructuring costs of approximately $ 554 in total costs and operating expenses in the consolidated statements of operations and comprehensive loss, all of which was paid.

As of December 31, 2020, there was $ 47 recorded in accounts payable for McCarter.

As of December 31, 2021, there was $ 0 recorded in accrued expenses for McCarter.

In November 2020, the Company engaged Specialty Pharma Consulting, LLC (“Specialty Pharma”), an entity affiliated with Kevin Coughenour, to provide services for quality engineering and validation activities in the ordinary course of business.

Coughenour is married to the Company’s former Chief Operating Officer Patricia Kitchen.

The Company incurred fees for quality engineering and validation activities rendered by Specialty Pharma of $ 155 , for the for the year ended December 31, 2021.

As of December 31, 2020, there was $ 47 recorded in accounts payable and $ 0 recorded in accrued expenses for Specialty Pharma.

On April 26, 2021, the Company and Specialty Pharma terminated their relationship.

The Company has engaged Wilmer Cutler Pickering Hale and Dorr LLP (“WilmerHale”) to provide certain legal services to the Company.

The Company's Chief Business Officer’s sister is a managing partner at WilmerHale, who has not participated in providing legal services to the Company.

The Company incurred fees for legal services rendered by WilmerHale of approximately $ 1,396 and $ 1,772 for the year ended December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, there was $ 119 and $ 114 recorded in accounts payable for WilmerHale.

As of December 31, 2021 and 2020, there was $ 68 and $ 239 recorded in accrued expenses for WilmerHale.

Subsequent Events

The number of shares of common stock that may be issued under the 2014 Plan is subject to increase on the first day of each fiscal year, beginning on January 1, 2015 and ending on December 31, 2024, equal to the least of 1,659,218 shares of the Company’s common stock, 4 % of the number of shares of the Company’s common stock outstanding on the first day of the applicable fiscal year, and an amount determined by the Company’s board of directors.

On January 1, 2021, the number of shares available for issuance under the 2014 Plan increased by 1,659,218 .

The number of shares of common stock that may be issued under the ESPP will automatically increase on the first day of each fiscal year, commencing on January 1, 2015 and ending on December 31, 2024, in an amount equal to the least of 207,402 shares of the Company’s common stock, 0.5 % of the number of shares of the Company’s common stock outstanding on the first day of the applicable fiscal year, and an amount determined by the Company’s board of directors.

On January 1, 2022, the number of shares available for issuance under the ESPP increased by 207,402 .

On January 29, 2021, warrants covering 18,939 shares were exercised via net share settlement, and the Company issued 11,737 shares of common stock as a result of the exercise.

The stock options are subject to the terms and conditions of stock option agreements covering the grant and the Company’s 2019 Inducement Plan, as amended to date.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures