Ocugen Inc.

11/04/2026 | Press release | Distributed by Public on 11/04/2026 08:44

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements for the year ended December 31, 2025, included in our 2025 Annual Report. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing, include forward-looking statements that involve risks, uncertainties, and assumptions. These statements are based on our beliefs and expectations about future outcomes and are subject to risks and uncertainties that could cause our actual results to differ materially from anticipated results. Except as required by law, we undertake no obligation to publicly update these forward-looking statements, whether as a result of new information, future events, or otherwise. You should read the "Risk Factors" section included in our 2025 Annual Report and 2026 Quarterly Reports, as applicable, and "Disclosure Regarding Forward-Looking Statements" section in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a pioneering biotechnology company focused on developing and then commercializing novel gene therapies to address blindness diseases with high unmet medical needs globally.
Novel Modifier Gene Therapy Platform -
Ocugen's modifier gene therapy platform underpins all of our late-stage clinical development programs and has the potential to address significant unmet medical needs across large global patient populations through a gene-agnostic approach. Unlike traditional gene therapies and gene-editing technologies that target a single gene mutation, our modifier gene therapy platform is designed to address the underlying disease biology and potentially restore balance across multiple gene networks - potentially enabling us to address large, underserved patient populations rather than narrow single-gene subsets.
We are currently advancing late-stage clinical development programs for inherited retinal diseases and other causes of blindness that we believe affect millions worldwide, including retinitis pigmentosa ("RP"), Stargardt disease, and geographic atrophy ("GA"), an advanced form of dry age-related macular degeneration ("AMD").
Our pipeline:
OCU400
OCU400 is an investigational product being developed for early to advanced cases of RP, spanning pediatric to adult populations, including clinical and/or genetic diagnosis with both syndromic and non-syndromic forms of the disease.
Our long-term, 3-year Phase 1/2 data for OCU400 were assessed in evaluable subjects and built on prior 2-year results suggesting consistent and clinically meaningful results - approximately 2-line low luminance visual acuity ("LLVA") improvement in treated eyes compared with untreated fellow eyes in 8 evaluable subjects across multiple genotypes. Additionally, OCU400 appears to have a favorable durability, safety and tolerability profile with no reported treatment-related serious adverse events or adverse events of interest. To date, we have completed enrollment in the Phase 3 liMeliGhT clinical trial for OCU400 (N=140 subjects), reflecting strong interest from investigators and patients; and we believe we have gained alignment with the U.S. Food and Drug Administration ("FDA") on the study design, including primary and secondary endpoints. Topline Phase 3 data is expected in the first quarter of 2027, with plans to submit a biologics license application ("BLA") shortly after.
OCU400 has been granted Regenerative Medicine Advanced Therapy ("RMAT") designation and Orphan Drug Designation ("ODD") by the FDA, and Orphan Medicinal Product Designation ("OMPD") and Advanced Therapy Medicinal Product ("ATMP") classification by the European Medicines Agency ("EMA"). Orphan designations provide certain incentives, including potential market exclusivity upon approval. The FDA acknowledged the regulatory eligibility to rolling BLA submission by virtue of our RMAT designation for OCU400, but under the FDA's general policy, we would need to submit topline Phase 3 data in a pre-BLA meeting prior to the FDA agreeing to a rolling submission schedule.
In September 2026, OCU400 was granted provisional approval and priority designation from the Longevity and Regenerative Therapies Act ("LARTA") Board, the regulatory agency responsible for reviewing and approving longevity and regenerative therapy programs within the Commonwealth of The Bahamas. In connection with LARTA's approval, Ocugen will supply
OCU400 through an expanded access program ("EAP"), with the goal of treating the first RP patient within 90 days, following full LARTA approval.
OCU410ST
OCU410ST is an investigational product being developed for the treatment of Stargardt disease, a rare inherited retinal disease ("IRD") associated with 1,200+ mutations of the ABCA4 gene. OCU410ST delivers the RORA (Retinoic Acid Receptor ("RAR") Related Orphan Receptor A) gene and is designed to act independently of the specific ABCA4 mutation.
The OCU410ST Phase 1 clinical trial was an open-label, fellow-eye controlled study with safety as the primary endpoint. Observed efficacy in evaluable subjects (N=6) demonstrated that atrophic lesions grew slower by 54% at 12 months for evaluable treated eyes compared to untreated eyes. In the secondary endpoint- Best Corrected Visual Acuity ("BCVA"), treated eyes showed an improvement with 1-line (6 ETDRS Letter) gain in the visual acuity when compared to untreated eyes. Additionally, 100% of evaluable treated eyes (N=6) demonstrated stabilization or improvement vs. untreated eyes in visual function. In evaluable subjects (N=6), the rate of ellipsoid zone ("EZ") loss was 116% slower in OCU410ST-treated eyes compared to untreated eyes at 12 months, demonstrating preservation or stabilization in photoreceptor integrity. The untreated eyes showed expected growth in atrophy. There have been no reported treatment-related serious adverse events or adverse events of interest to date.
OCU410ST has been granted ODD and Rare Pediatric Disease Designation ("RPDD") by the FDA, and OMPD designation and ATMP classification by the EMA. The Committee for Medicinal Products for Human Use ("CHMP") of the EMA reviewed the study design, endpoints and planned statistical analysis of the ongoing pivotal confirmatory OCU410ST Phase 2/3 GARDian3 clinical trial and provided initial feedback that a single U.S. based trial may be acceptable to support a Marketing Authorization Application ("MAA") in the EU.
We completed enrollment in the Phase 2/3 pivotal confirmatory trial (N=63 subjects) early, in just nine months, and expect topline Phase 3 results in the second quarter of 2027, followed by a BLA submission in mid-2027.
As previously disclosed in our Current Report on Form 8-K filed with the SEC on September 8, 2026, after completing a pre-specified interim analysis of atrophic lesion size in the Phase 2/3 clinical trial of OCU410ST in Stargardt disease, the independent Data Monitoring Committee ("DMC") recommended continuing the study according to the protocol except with a modification to obtain 8 months of follow up on lesion size in the entire study population. We are currently planning to continue the study to month 12 to analyze full data sets from all enrolled subjects.
OCU410
OCU410 is an investigational product being developed for the treatment of GA, secondary to dry AMD, a leading cause of severe central vision loss and legal blindness worldwide.
In March 2026 we announced 12-month topline data from the Phase 2 ArMaDa2 clinical trial. Key findings include a 31% reduction in lesion growth in the optimal dose ("medium") group compared to control (p< 0.05); 27% slower rate of EZ loss compared to control, indicating structural preservation of photoreceptors, which is believed to correlate with visual function; and 55% of treated patients demonstrating ≥30% lesion size reduction vs. control.
OCU410, which has been granted RMAT designation by the FDA, and ATMP classification by the EMA, initiated its global Phase 3 trial, ArMaDa3, and dosed the first subject in the third quarter of 2026. The initiation of dosing followed the successful completion of a Type B End-of-Phase 2 ("EOP2") meeting with the Center for Biologics Evaluation and Research ("CBER") of the FDA in June 2026, resulting in alignment on Phase 3 design elements, including primary and secondary endpoints, dose, adaptive design, and a single pivotal trial pathway to potentially support a BLA submission.
Additional Development Programs
Novel Biologic Therapy for Retinal Diseases - OCU200 is an investigational, novel recombinant fusion protein consisting of two human proteins, tumstatin and transferrin. OCU200 is designed to treat vascular complications of diabetic macular edema ("DME"), diabetic retinopathy ("DR"), and wet age-related macular degeneration ("AMD"). Tumstatin is the active component of OCU200 and binds to integrin receptors, which play a crucial role in disease pathogenesis. Transferrin is expected to facilitate the targeted delivery of tumstatin into the retina and choroid and potentially help increase the interaction between tumstatin and integrin receptors. OCU200 Phase 1 clinical trial enrollment was completed in the first quarter of 2026.
Inhaled Mucosal Vaccine Platform - Our next-generation, investigational inhaled mucosal vaccine platform includes OCU500, a COVID-19 vaccine. We have completed IND-enabling studies and GMP manufacturing of clinical trial material for OCU500. The Company is collaborating with the National Institute of Allergy and Infectious Diseases ("NIAID"), part of the National Institutes of Health, for the Phase 1 clinical trial for OCU500. NIAID is responsible for conducting and funding these studies, including contracting with clinical sites and service providers. The Company supplies investigational product for use in the studies and incurs only those costs for which it is directly responsible. Accordingly, costs funded directly by NIAID are not included in the Company's research and development expenses. NIAID initiated the Phase 1 clinical trial for OCU500 in the second quarter of 2026.
Results of Operations
Comparison of the Three Months Ended September 30, 2026 and 2025
The following table summarizes the results of our operations for the three months ended September 30, 2026 and 2025 (in thousands):
Three months ended September 30,
2026 2025 Change
Collaborative arrangement revenue $ 1,951 $ 1,752 $ 199
Total Revenue 1,951 1,752 199
Operating expenses
Research and development 12,500 11,149 1,351
General and administrative 7,204 8,228 (1,024)
Total operating expenses 19,704 19,377 327
Loss from operations (17,753) (17,625) (128)
Other income (expense):
Interest expense (3,090) (1,314) (1,776)
Interest income 649 207 442
Change in fair value of derivative liability 16,562 - 16,562
Other (expense) income, net 34 (1,319) 1,353
Total other (expense) income $ 14,155 $ (2,426) $ 16,581
Net loss $ (3,598) $ (20,051) $ (16,453)
The following table summarizes our research and development expenses by product candidate for the three months ended September 30, 2026 and 2025 (in thousands):
Three months ended September 30,
2026 2025 Change
OCU400 $ 2,986 $ 3,616 $ (630)
OCU410 and OCU410ST 2,834 1,373 1,461
NeoCart 61 19 42
COVAXIN 3 - 3
OCU500 145 67 78
OCU200 47 131 (84)
Unallocated costs:
Research and development personnel costs 5,284 4,353 931
Facilities and other support costs 837 864 (27)
Other 303 726 (423)
Total research and development $ 12,500 $ 11,149 $ 1,351
Collaborative arrangement revenue
Collaborative arrangement revenue increased by $0.2 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was due to our quarterly assessment of the amount of co-development services provided by us to our business partner in the collaboration agreement.
Research and development expense
Research and development expense increased by $1.4 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily due to $1.5 million of expenses related to OCU410 and OCU410ST which were driven by an increase in clinical and milestone payments for the three months ended September 30, 2026. This increase is also related to $0.9 million of additional personnel related costs due to higher headcount during the three months ended September 30, 2026. These increases were partially offset by a $0.6 million decrease in OCU400 related expenses, driven by a decrease in clinical activities and a $0.4 million decrease in other costs related to research and development consulting during the three months ended September 30, 2026.
General and administrative expense
General and administrative expense decreased by $1.0 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease was primarily due to external professional services fees.
Interest income
Interest income increased by $0.4 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily due to a higher average cash balance and short-term investments for the three months ended September 30, 2026.
Interest expense
Interest expense increased by $1.8 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This increase was primarily attributable to interest incurred on our Convertible Notes which were issued during the second quarter of 2026.
Change in fair value of derivative liability
The change in fair value of the derivative liability increased by $16.6 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This increase was due to the remeasurement of the derivative liability related to the Convertible Notes issued during the second quarter of 2026.
Other (expense) income, net
Other (expense) income, net decreased by $1.4 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. This decrease was primarily due to a one-time contract termination fee which occurred in the third quarter of 2025.
Comparison of the Nine Months Ended September 30, 2026 and 2025
The following table summarizes the results of our operations for the nine months ended September 30, 2026 and 2025 (in thousands):
Nine months ended September 30,
2026 2025 Change
Collaboration revenue $ 4,973 $ 4,606 $ 367
Total revenues 4,973 4,606 367
Operating expenses
Research and development 34,445 29,081 5,364
General and administrative 22,563 21,446 1,117
Total operating expenses 57,008 50,527 6,481
Loss from operations (52,035) (45,921) (6,114)
Other income (expense):
Interest income 1,174 778 396
Interest expense (8,886) (3,856) (5,030)
Loss on extinguishment of debt (2,383) - (2,383)
Change in fair value of derivative liability 14,671 - 14,671
Other (expense) income, net (194) (1,141) 947
Total Other (expense) income, net 4,382 (4,219) 8,601
Net loss $ (47,653) $ (50,140) $ 2,487
The following table summarizes our research and development expenses by product candidate for the nine months ended September 30, 2026 and 2025 (in thousands):
Nine months ended September 30,
2026 2025 Change
OCU400 $ 6,502 $ 7,463 $ (961)
OCU410 and OCU410ST 6,799 3,675 3,124
NeoCart 279 25 254
COVAXIN 13 - 13
OCU500 224 399 (175)
OCU200 307 530 (223)
Unallocated costs:
Research and development personnel costs 16,036 12,454 3,582
Facilities and other support costs 2,646 2,665 (19)
Other 1,639 1,870 (231)
Total research and development $ 34,445 $ 29,081 $ 5,364
Collaborative arrangement revenue
Collaborative arrangement revenue increased by $0.4 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was due to our quarterly assessment of the amount of co-development services provided by us to our business partner in the collaboration agreement.
Research and development expense
Research and development expense increased by $5.4 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily due to $3.6 million of additional personnel related costs due to higher headcount for the nine months ended September 30, 2026. The increase also relates to $3.1 million of expenses related to OCU410 and OCU410ST, which were driven by an increase in clinical and milestone payments for the nine months ended September 30, 2026. These were partially offset by $1.3 million in other research and development expenses, primarily related to a decrease in OCU400 expenses, which was driven by a reduction in clinical activities for the nine months ended September 30, 2026.
General and administrative expense
General and administrative expense increased by $1.1 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily due to $2.7 million of additional personnel expenses related to an increase in headcount and corporate related fees for the nine months ended September 30, 2026. This increase was partially offset by a decrease of $1.6 million in professional service fees.
Interest income
Interest income increased by $0.4 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily due to a higher average cash balance and short-term investments during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.
Interest expense
Interest expense increased $5.0 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase was primarily attributable to interest incurred on our Convertible Notes which were issued during the second quarter of 2026.
Loss on extinguishment of debt
The loss on extinguishment of debt increased by $2.4 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This increase was a result of the payoff of our Avenue Capital Loan which occurred during the second quarter of 2026.
Change in fair value of derivative liability
The change in fair value of the derivative liability increased by $14.7 million during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. This increase was due to the remeasurement of the derivative liability related to the Convertible Notes issued during the second quarter of 2026.
Other (expense) income, net
Other (expense) income, net decreased by $0.9 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The decrease was primarily due to a one-time contract termination fee which occurred in the third quarter of 2025.
Liquidity and Capital Resources
As of September 30, 2026, we had $24.6 million in cash and cash equivalents, along with $0.3 million of restricted cash and $59.6 million of short-term investments. To date, we have not generated revenue from our product candidates. Since our inception and through September 30, 2026, we have funded our operations through gross proceeds from the sale of our common stock and warrants, from the issuance of convertible notes and additional indebtedness, from royalty agreements, and from grant proceeds.
Since our inception, we have devoted substantial resources to research and development and have incurred significant net losses and may continue to incur net losses in the future. We incurred net losses of approximately $47.7 million and $50.1 million for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we had an accumulated deficit of
$455.7 million. In addition, we had accounts payable and accrued expenses and other current liabilities of $17.8 million and indebtedness of $102.0 million.
The following table provides a summary of our cash flows for the nine months ended September 30, 2026 and 2025 (in thousands):
Nine months ended September 30,
2026 2025
Net cash used in operating activities $ (49,731) $ (43,003)
Net cash used in investing activities (59,801) (276)
Net cash provided by financing activities 115,513 17,326
Effect of changes in exchange rate on cash and restricted cash 84 10
Net increase (decrease) in cash, cash equivalents and restricted cash $ 6,065 $ (25,943)
In May 2026, we completed a private offering of $130.0 million aggregate principal amount of Convertible Notes, generating net proceeds of approximately $112.5 million after discounts, commissions, and offering expenses. We used approximately $32.7 million of the net proceeds from this offering, to fully repay and terminate our Avenue Capital Loan with the remaining proceeds available for general corporate purposes. The Convertible Notes are general unsecured obligations and bear interest at a rate of 6.75% per year payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2026. The Convertible Notes mature on May 15, 2034, unless earlier repurchased, redeemed or converted.
Operating activities
Cash used in operating activities was $49.7 million for the nine months ended September 30, 2026, and primarily consisted of a net loss of $47.7 million adjusted for non-cash items including stock-based compensation of $7.2 million, depreciation and amortization of $1.7 million, non-cash lease expense of $0.9 million, non-cash expense from collaborative arrangements, net of $3.5 million, other non-cash items of $0.1 million, and a change in net working capital of $0.7 million.
Cash used in operating activities was $43.0 million for the nine months ended September 30, 2025, and primarily consisted of a net loss of $50.1 million adjusted for non-cash items including stock-based compensation of $5.7 million, non-cash expense from collaborative arrangements, net of $2.7 million, non-cash lease expense of $0.9 million, depreciation and amortization of $2.8 million, other non-cash items of $0.1 million, and a change in net working capital of $0.3 million.
Investing activities
Cash used in investing activities was $59.8 million for the nine months ended September 30, 2026, and primarily consisted of purchases of short-term investments using proceeds from the issuance of the Convertible Notes. Cash used in investing activities was $0.3 million for the nine months ended September 30, 2025, which was mainly attributable to the purchase of property and equipment.
Financing activities
Cash provided by financing activities was $115.5 million for the nine months ended September 30, 2026 compared to cash provided by financing activities of $17.3 million for the nine months ended September 30, 2025. During the nine months ended September 30, 2026, cash provided by financing activities increased primarily due to the issuance of Convertible Notes in May 2026, proceeds from the equity offering in January 2026 and exercise of warrants, offset by the repayment of our Avenue Capital Loan and other costs related to the issuance of our Convertible Notes. During the nine months ended September 30, 2025, cash provided by financing activities primarily consisted of gross proceeds of $18.3 million related to the sale of common stock and warrants, partially offset by a repayment of $1.0 million of the EB-5 Loan.
Contractual Obligations
We have commitments under certain licensing and development agreements, lease obligations, debt agreements, and consulting agreements. Except in connection with the issuance of Convertible Notes pursuant to the Indenture in May 2026, as described in this Quarterly Report on Form 10-Q, there have been no material changes to our contractual obligations as reported in our 2025 Annual Report.
Funding requirements
We expect to continue to incur significant expenses in connection with our ongoing activities, particularly as we continue research and development, including preclinical and clinical development of our product candidates, prepare to manufacture our product candidates, prepare for the potential commercialization of our product candidates, add operational, financial, and information systems to execute our business plan, maintain, expand, and protect our patent portfolio, explore strategic licensing, acquisition, and collaboration opportunities to expand our product candidate pipeline to support our future growth; expand headcount to support our development, commercialization, and business efforts, and operate as a public company.
Factors impacting our future funding requirements include, without limitation, the following:
•the initiation, progress, timing, costs, and results of clinical trials for our product candidates;
•the preparation and submission of Investigational New Drug applications, or INDs, with the FDA for current and future product candidates;
•the outcome, timing, and cost of the regulatory approval process for our product candidates;
•the timing and terms of the conversion of Convertible Notes under the Indenture;
•the costs of manufacturing and commercialization;
•the costs related to doing business internationally with respect to the development and commercialization of our product candidates;
•the cost of filing, prosecuting, defending, and enforcing our patent claims and other intellectual property rights;
•the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us;
•the acquisition of or in-licensing of additional product candidates and technologies;
•the costs of expanding infrastructure to support our development, commercialization, and business efforts, including the costs related to the development of a laboratory and manufacturing facility;
•the costs involved in recruiting and retaining skilled personnel;
•the extent to which we in-license or acquire other products, product candidates, or technologies and out-license our product candidates;
•the impact of geopolitical turmoil, macroeconomic conditions, social unrest, political instability, terrorism, or other acts of war; and
•the changes in tariffs and indirect trade restraints, including increased costs associated with global and retaliatory tariff policies.
We have incurred recurring operating losses, generated negative cash flows from operations, and expect to continue to incur significant expenditures to support the research, development, and potential commercialization of our product candidates. We have funded our operations to date through the sale of common stock, warrants to purchase common stock, the issuance of convertible notes and debt, and grant proceeds. We have incurred net losses of approximately $47.7 million and $50.1 million for the nine months ended September 30, 2026 and 2025, respectively. We have incurred net losses of approximately $3.6 million and $20.1 million for the three months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we had an accumulated deficit of $455.7 million and cash and cash equivalents and short-term investments totaling $84.3 million.
In January 2026, we raised approximately $20.7 million in net proceeds through an underwritten registered direct offering of shares of common stock. In March 2026, investors partially exercised outstanding warrants, resulting in $14.2 million in net proceeds. In May 2026, we completed a private offering of $130.0 million aggregate principal amount of Convertible Notes, generating net proceeds of approximately $112.5 million after discounts, commissions, and offering expenses. We used approximately $32.7 million of the net proceeds from this offering to fully repay and terminate the Avenue Capital Loan, with the remaining proceeds available for general corporate purposes.
Management believes these financing transactions strengthened our financial position and, based on our current cash, cash equivalents, and anticipated operating plans, provide us with increased flexibility to fund our operations and strategic priorities. However, management's going concern assessment requires consideration of all known and reasonably knowable conditions and events through one year from the issuance date of these unaudited condensed consolidated financial statements, including
our recurring operating losses, expected negative cash flows from operations, future clinical and commercialization expenditures, and obligations and uncertainties related our financing arrangements, including potential settlement and share reservation considerations associated with the convertible notes.
After evaluating these conditions and management's plans, we have concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date these unaudited condensed consolidated financial statements are issued. Management continues to evaluate and pursue plans to mitigate these conditions, which may include raising additional capital, managing the timing and scope of operating expenditures, pursuing strategic partnerships or licensing arrangements, and other financing or corporate transactions. There can be no assurance that such plans will be successfully implemented, that additional financing will be available on acceptable terms, or at all, or that we will be able to execute our strategic plans within the required timeframe. If we are unable to obtain additional funding or otherwise successfully execute our plans when needed, we may be required to delay, reduce, or eliminate certain research and development programs and, commercialization activities, consider various strategic alternatives, including a merger or sale, or cease our operations.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements during the periods presented, and we do not currently have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.
Critical Accounting Policies and Significant Judgments and Estimates
The preparation of financial statements in conformity with GAAP requires us to make judgments, estimates, and assumptions in the preparation of our unaudited condensed consolidated financial statements. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies and estimates as reported in our 2025 Annual Report except as noted below:
Derivative Liability
During the quarter ended June 30, 2026, the Company adopted an accounting policy for derivative liabilities in connection with the issuance of convertible notes containing embedded conversion options that require bifurcation and separate accounting as derivative instruments under ASC 815, Derivatives and Hedging. As this is the first time the Company has entered into transactions containing such features, the adoption of this accounting policy relates to a new type of transaction and does not represent a change in accounting principle.
The Company evaluates the terms of its convertible instruments at issuance and at each reporting date to determine whether embedded conversion features require bifurcation from the host debt instrument. When bifurcation is required, the embedded conversion option is initially recognized as a derivative liability at fair value on the issuance date. The debt host is initially recorded at the residual amount after allocating the proceeds to the derivative liability. The derivative liability is subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in the unaudited condensed consolidated statements of operations. The debt discount resulting from the initial allocation to the derivative liability is amortized to interest expense over the contractual term of the convertible notes using the effective interest method.
The fair value of the derivative liability is determined using appropriate valuation techniques that incorporate observable market data, when available, and significant unobservable inputs, as necessary. Accordingly, the derivative liability is generally classified within Level 3 of the fair value hierarchy.
Recently Adopted Accounting Pronouncements
For a discussion of recently adopted accounting pronouncements, see Note 2 in the notes to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Ocugen Inc. published this content on November 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 04, 2026 at 14:44 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]