Business Context and Reporting Period
Ocugen, Inc. is a clinical-stage biopharmaceutical company focused on COVAXIN, a COVID-19 vaccine candidate, and retinal disease therapies, including the modifier gene therapies OCU400 and OCU410 and biologic candidate OCU200. This Form 10-K covers the fiscal year ended December 31, 2021, with comparative results for 2020 and 2019. The filing was signed February 28, 2022.
- COVAXIN: exclusive U.S. and Canadian development and commercialization rights under agreements with Bharat Biotech; Ocugen retains 45% of defined operating profits in those territories.
- OCU400: FDA IND accepted in December 2021 for NR2E3- and RHO-related inherited retinal degeneration; Phase 1/2 trial initiated, with first dosing expected in the first half of 2022.
- OCU410: pre-IND studies for dry age-related macular degeneration.
- OCU200: preclinical development for diabetic macular edema, diabetic retinopathy, and wet AMD.
Financial Metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | $0.0 million | $0.043 million | Down $0.043 million |
| Research and development expense | $35.1 million | $6.4 million | Up $28.8 million |
| In-process research and development expense | $0.0 million | $7.0 million | Down $7.0 million |
| General and administrative expense | $22.9 million | $8.0 million | Up $14.9 million |
| Total operating expenses | $58.0 million | $21.3 million | Up $36.7 million |
| Loss from operations | $58.0 million | $21.3 million | Higher loss by $36.7 million |
| Net loss | $58.4 million | $21.8 million | Higher loss by $36.5 million |
| Basic and diluted net loss per share | $0.30 loss | $0.31 loss | Per-share loss slightly lower |
| Net cash used in operating activities | $47.9 million | $14.7 million | Higher use by $33.2 million |
| Net cash used in investing activities | $1.8 million | $0.3 million | Higher use by $1.5 million |
| Net cash provided by financing activities | $120.7 million | $31.6 million | Up $89.1 million |
At December 31, 2021, cash and cash equivalents were $95.0 million, restricted cash was $0.2 million, accumulated deficit was $131.7 million, and total stockholders’ equity was $95.8 million. The company had $1.7 million of debt, including $1.5 million of outstanding EB-5 principal, and $1.6 million of operating lease liabilities.
Operating margin and net margin were not meaningful because the company had no significant revenue and incurred operating and net losses. Stock-based compensation expense increased to $7.0 million from $0.7 million. The company had $12.6 million of unrecognized stock-based compensation expense expected to be recognized over a weighted-average period of 2.1 years.
Material Changes Versus the Prior Comparable Period
- R&D expense increased primarily because of the $15.0 million non-refundable upfront payment to Bharat Biotech for Canadian rights, higher COVAXIN development, regulatory and manufacturing activity, OCU400 development, employee costs, stock-based compensation, and OCU200 preclinical work.
- G&A expense increased due to higher stock-based compensation, professional fees, employee-related costs, stockholder meetings and proxy solicitation, and COVAXIN pre-commercialization costs.
- 2020 included a $7.0 million write-off of an intangible asset held for sale; no comparable charge was recorded in 2021.
- Cash increased by $70.9 million during 2021, primarily from equity financings, while operating cash consumption more than tripled.
- Ocugen sold approximately 13.0 million shares in 2021 registered direct offerings for net proceeds of $114.6 million and sold approximately 1.0 million shares through an ATM for net proceeds of $4.8 million.
- The PPP loan was forgiven in 2021, resulting in a $0.4 million gain. A $0.8 million promissory note was written off as uncollectible, producing a loss in other expense.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management expects 2022 R&D and G&A expenses to increase as the company advances COVAXIN, OCU400, OCU410, and OCU200 and prepares for potential commercialization.
- The FDA lifted the clinical hold on the adult COVAXIN IND in February 2022. Management planned to begin a Phase 2/3 immuno-bridging and broadening trial, pursue a safety-bridging trial in the first half of 2022, and target a BLA submission near the end of 2022. These are plans, not completed milestones.
- The FDA was reviewing Ocugen’s pediatric COVAXIN EUA request. Health Canada issued a Notice of Deficiency requiring additional analyses and CMC information; Ocugen’s responses remained under review.
- Technology transfer from Bharat Biotech to Jubilant HollisterStier had begun, but a commercial master services agreement had not yet been finalized. Qualification manufacturing runs were expected by mid-2022.
- In February 2022, Ocugen committed to purchase $14.3 million of COVAXIN drug product components from Bharat Biotech; the previously issued preferred stock advance is to be applied to this commitment.
- In January 2022, Ocugen signed a non-binding letter of intent to acquire a manufacturing site in Ontario. Closing remained subject to due diligence, definitive agreements, funding, and other conditions.
- The company received $49.8 million of net proceeds from a February 2022 public offering of 16.0 million common shares, after year-end.
- The audited financial statements include substantial doubt about the company’s ability to continue as a going concern within one year after issuance. Management stated that the $95.1 million cash, cash equivalents, and restricted cash balance would not meet capital requirements for the next 12 months and that significant additional financing is required.
- Material risks include failure to obtain FDA or Health Canada authorization, clinical-trial delays or unfavorable results, competition and declining COVID-19 vaccine demand, reliance on Bharat Biotech and other contract manufacturers, supply and technology-transfer risks, dilution from additional financings, uncertain reimbursement, intellectual-property risks, and the novel safety and regulatory risks of gene therapy.
- Two securities class actions and two related derivative lawsuits were pending concerning statements about the COVAXIN regulatory strategy. Ocugen believes the claims lack merit; no loss was accrued because a probable and reasonably estimable loss could not be established.
Most Important Facts an Investor Should Verify
- Whether Ocugen obtained FDA authorization or approval for pediatric or adult COVAXIN use and whether Health Canada resolved the NOD.
- Whether the planned COVAXIN Phase 2/3 and safety-bridging trials were initiated, completed, and sufficient for a BLA.
- Whether the Bharat Biotech-to-Jubilant HollisterStier technology transfer and qualification manufacturing runs succeeded and whether a binding manufacturing agreement was executed.
- Current cash runway, subsequent equity issuance, dilution, and the company’s ability to raise additional capital.
- Progress, enrollment, safety, and efficacy data for OCU400 and the status of OCU410 and OCU200 development.
- Status and potential financial exposure of the securities and derivative litigation.
- Whether the proposed Ontario manufacturing-site acquisition closed and the amount of additional capital required to upgrade the facility.