Business Context and Reporting Period
This Form 8-K is filed by Histogenics Corporation (referred to in metadata as Ocugen, Inc.) on December 21, 2018, reporting events occurring on December 19, 20, and 21, 2018. The Company is a biopharmaceutical firm focused on regenerative medicine, specifically the development of NeoCart.
Key Financial Metrics and Agreements
- Collaboration Termination: The Company terminated its Exclusive Channel Collaboration with Intrexon Corporation. In lieu of paying approximately $3.0 million in accrued R&D expenses, the Company agreed to pay Intrexon up to $1.5 million total ($0.375 million immediate; $1.125 million contingent on a future BLA submission).
- Liquidity and Listing Status: The Company received notice from Nasdaq that its market value of listed securities fell below $35 million for 30 consecutive business days. It has 180 days (until June 17, 2019) to regain compliance.
- Executive Compensation: A new consulting agreement was entered with Danforth Advisors, LLC for interim CFO services at an agreed hourly rate plus expense reimbursement.
Material Changes and Operational Updates
- Product Development Halt: Following a meeting with the FDA on December 20, 2018, the Company expects to discontinue the development of NeoCart. The FDA indicated that an additional clinical trial is required before accepting a Biologics License Application (BLA), a step the Company deems too costly and time-consuming given current resources.
- Leadership Transition: Jonathan Lieber resigned as full-time Chief Financial Officer and Treasurer effective December 21, 2018, to pursue other opportunities. He was immediately appointed as Interim CFO under a consulting arrangement with Danforth Advisors.
- Strategic Review: The Board has initiated a process to evaluate strategic alternatives, including acquisitions, business combinations, capital raises, asset sales, or liquidation.
Outlook, Risks, and Contingencies
The Company faces significant financial distress and operational uncertainty. Due to limited cash reserves and the decision to halt NeoCart development, the Company is considering restructuring, a wind-down of operations, or seeking Chapter 11 bankruptcy protection. The Board has retained Canaccord Genuity LLC as a financial advisor to assist in evaluating these alternatives. There is no certainty that any strategic alternative will be executed or that the Company will avoid liquidation.
The Company also noted it will not proceed with previously planned stockholder meetings regarding a reverse split or increase in authorized shares.
Investor Verification Checklist
- Verify the Company's current cash position and runway given the halt in NeoCart development and potential wind-down.
- Monitor the progress of the strategic alternatives review and any announcements regarding bankruptcy or liquidation.
- Track the Company's ability to regain Nasdaq compliance (market value >$35 million) by June 17, 2019.
- Confirm the status of the $1.125 million contingent payment to Intrexon, which is now unlikely to be triggered given the discontinuation of NeoCart.
- Review the terms of the interim CFO consulting agreement for potential conflicts or cost implications.