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 Annual Report on Form 10-K. 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. 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" and "Special Note Regarding Forward-Looking Statements" sections of this Annual Report on Form 10-K 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. OnSeptember 27, 2019 ,Ocugen completed its reverse merger withOcugen OpCo Inc. (formerly known asOcugen, Inc. ("Former Ocugen")) in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as ofApril 5, 2019 , by and amongHistogenics ,Former Ocugen and Restore Merger Sub, Inc. , a wholly owned subsidiary ofHistogenics ("Merger Sub"), as amended (the "Merger Agreement"), pursuant to which Merger Sub merged with and into Former Ocugen, with Former Ocugen surviving as a wholly owned subsidiary ofHistogenics (the "Merger"). Immediately after completion of the Merger,Histogenics changed its name toOcugen, Inc. For accounting purposes, the Merger is treated as a "reverse asset acquisition" under generally acceptable accounting principles inthe United States ("U.S. GAAP") and Former Ocugen is considered the accounting acquirer. Accordingly, Former Ocugen's historical results of operations replaced the Company's historical results of operations for all periods prior to the Merger and, for all periods following the Merger, the results of operations of the combined company will be included in the Company's financial statements. Overview We are a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing transformative therapies to treat the whole eye. Our lead product candidate, OCU300, is a small molecule therapeutic currently in Phase 3 clinical development for patients with ocular redness and discomfort stemming from ocular graft-versus-host disease ("oGVHD"). As ofMarch 20, 2020 , we had completed over 95% of planned enrollment of our Phase 3 clinical trial for OCU300. OCU300 has received Orphan Drug Designation ("ODD") from theU.S. Food and Drug Administration (the "FDA"), and it is the first and only product candidate to receive that designation for the treatment of symptoms associated with oGVHD. oGVHD, a severe chronic autoimmune disease that occurs in up to 60% of allogeneic hematopoietic stem cell transplantation ("HSCT") patients, can result in light sensitivity, excessive ocular redness, severe ocular pain and, ultimately, vision impairment. We estimate the current prevalence of patients suffering from oGVHD inthe United States to be approximately 63,000. OCU300 is formulated using our proprietary nanoemulsion technology, OcuNanoE-Ocugen's ONE Platform™ ("OcuNanoE™"), which we believe represents an effective drug delivery mechanism to treat ocular surface disorders. We believe that OcuNanoE™ provides additional protection to the ocular surface and the potential for enhanced efficacy compared to traditional formulations. We are the first company to use nanoemulsion technology in the ophthalmology space. We were developing OCU310 for patients with dry eye disease, which is also formulated using OcuNanoE™. We have completed a Phase 3 clinical trial for OCU310 that was initiated inSeptember 2018 . Although the trial showed that OCU310 is safe and well-tolerated, it did not meet its co-primary endpoints for symptom and sign. We are no longer pursuing the development of this product candidate. We are also developing a modifier gene therapy platform to generate therapies designed to fulfill unmet medical needs in the area of retinal diseases, including inherited retinal diseases ("IRDs"). Our modifier gene therapy platform is being designed to target nuclear hormone receptors ("NHRs"), which have the potential to restore homeostasis to the retina. Unlike single-gene replacement therapies, which only target one genetic mutation, we believe that our gene therapy platform, through its use of NHRs, represents a novel approach in that it may address multiple retinal diseases with one product. Our first gene therapy candidate, OCU400, received two ODDs from the FDA, one for the treatment of nuclear receptor subfamily 2 group E member 3 ("NR2E3") mutation-associated retinal diseases and the other for the treatment of centrosomal protein 290 ("CEP290") mutation-associated retinal diseases. We are planning to initiate a Phase 1/2a clinical trial for OCU400 in the next two years. Our second gene therapy candidate, OCU410, is being developed to utilize the nuclear receptor genes RAR-related orphan receptor A ("RORA") for the treatment of dry age-related macular degeneration ("AMD"). This candidate is currently in preclinical development. 85
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Table of Contents Additionally, we are conducting preclinical development for a novel biologic product candidate. OCU200 is a novel fusion protein designed to treat diabetic macular edema ("DME"), diabetic retinopathy ("DR") and wet age-related macular degeneration ("wet AMD"). We expect to initiate a Phase 1/2 clinical trial for OCU200 within the next two years. We plan to expand the therapeutic applications of OCU200 beyond DME, DR and wet AMD to potentially include macular edema following retinal vein occlusion ("RVO") and myopic choroidal neovascularization ("mCNV"). We have no products approved for commercial sale and have not generated any revenue from product sales. We have never been profitable and have incurred operating losses in each year since inception. We incurred net losses of approximately$20.2 million and$18.2 million for the fiscal years endedDecember 31, 2019 and 2018, respectively. As ofDecember 31, 2019 , we had an accumulated deficit of$51.5 million and a cash, cash equivalents and restricted cash balance of$7.6 million . Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations. To date, we have viewed our operations and manage our business as one operating segment. As ofDecember 31, 2019 , all of our assets were located inthe United States . Our headquarters and operations are located inMalvern, Pennsylvania . Financial Operations Overview Research and development expense Research and development costs are expensed as incurred. These costs consist of internal and external expenses. Internal expenses include the cost of salaries, benefits and other related costs, including stock-based compensation, for personnel serving in our product development functions, as well as allocated rent and utilities expenses. External expenses include development, clinical trials, patent costs and regulatory compliance costs incurred with research organizations and other third-party vendors. License fees paid to acquire access to proprietary technology are expensed to research and development unless it is determined that the technology is expected to have an alternative future use. All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred to research and development expense due to the uncertainty about the recovery of the expenditure. We record costs for certain development activities, such as clinical trials, based on our evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to us by our vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued research and development expense, as the case may be. We plan to incur research and development expenses for the foreseeable future as we expect to continue development and eventual commercialization of one or more of our product candidates, if approved. We anticipate that our research and development expenses will increase substantially as compared to prior periods as we complete our Phase 3 trial with respect to OCU300 and prepare to commence Phase 1/2a trials with respect to OCU400, OCU410 and OCU200, and otherwise develop and prepare for commercialization of our product candidates. At this time, due to the inherently unpredictable nature of preclinical and clinical development, we are unable to estimate with any certainty the costs we will incur and the timelines we will require in our continued development efforts. As a result of the uncertainties discussed above, successful development and completion of clinical trials is uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each future product candidate and are difficult to predict. We will continue to make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to our ability to enter into collaborations with respect to each product candidate, the scientific and clinical success of each product candidate as well as ongoing assessments as to the commercial potential of each product candidates. General and administrative expense General and administrative expense consists primarily of personnel expenses, including salaries, benefits and stock-based compensation expense, for employees in executive, accounting and other administrative functions. General and administrative expense also includes corporate facility costs, including rent and utilities, as well as legal fees related to corporate matters and fees for accounting and other consulting services. We anticipate that our general and administrative expense will increase as a result of an expanded infrastructure and an increased headcount. We anticipate higher corporate infrastructure costs including, but not limited to accounting, legal, human resources, consulting, and investor relations fees, as well as increased director and officer insurance premiums, associated with becoming a public company. Additionally, if and when we believe a regulatory approval of a product candidate appears likely, 86
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Table of Contents we anticipate an increase in payroll and expense as a result of its preparation for commercial operations, especially as it relates to the sales and marketing of our product candidates. Change in fair value of derivative liabilities Change in fair value of derivative liabilities includes the change in fair value each reporting period of (a) the conversion and change in control features embedded in certain convertible notes, which were required to be bifurcated and recognized at fair value, and (b) the change in the fair value of the Company's Series B Warrants that were issued in connection with a Securities Purchase Agreement entered into with certain accredited investors inJune 2019 . The change in fair value of derivative liabilities related to the Series B Warrants was recognized through the date the Series B Warrants were reclassified to equity. The reclassification to equity occurred once the Series B Warrants were reassessed and determined to meet the derivative scope exception related to equity indexation allowing for equity classification. See Note 10 in the notes to the consolidated financial statements included in this report for additional information. The change in fair value of derivative liabilities related to our convertible notes was recognized through the date that the notes were converted or otherwise settled. There were no derivative liabilities valued as ofDecember 31, 2019 . Other income (expense) Other income (expense) consists primarily of interest expense, including the amortization of debt issuance costs related to our debt and accretion of the discount created by the bifurcation of the embedded conversion features and embedded change in control features from certain of the convertible promissory notes, interest income earned on our cash and cash equivalents held with institutional banks, and foreign currency income (losses) due to exchange rate fluctuations on transactions denominated in a currency other than its functional currency. Critical Accounting Policies and Significant Judgments and Estimates Our consolidated financial statements are prepared in accordance withU.S. generally accepted accounting principles ("GAAP"). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reported period. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. While our significant accounting policies are described in more detail in the notes to the consolidated financial statements appearing elsewhere in this report, we believe that the following accounting policies and estimates are those most critical to the preparation of our consolidated financial statements: Stock-based compensation We account for our stock-based compensation awards in accordance with theFinancial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Topic 718, Compensation-Stock Compensation ("ASC 718"). ASC 718 requires all stock-based payments to employees, including grants of employee stock options and restricted stock units and modifications to existing agreements, to be recognized in the statements of operations based on their fair values. We use the Black-Scholes option-pricing model to determine the fair value of options granted. Our stock-based awards are subject to service-based vesting conditions. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Estimating the fair value of options requires the input of subjective assumptions, including expected life of the option, stock price volatility, the risk-free interest rate and expected dividends. The assumptions used in our Black-Scholes option-pricing model represent our best estimates and involve a number of variables, uncertainties and assumptions and the application of management's judgment, as they are inherently subjective. If any assumptions change, our stock-based compensation expense could be materially different in the future. 87
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Table of Contents These assumptions used in our Black-Scholes option-pricing model are as follows: Expected Term. Due to the historical lack of a public market for the trading of our common stock and the lack of sufficient company-specific historical data, the expected term of employee options is determined using the "simplified" method, as prescribed inSecurities and Exchange Commission's ("SEC") Staff Accounting Bulletin No. 107 ("SAB No. 107"), whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option. The expected term of non-employee options is equal to the contractual term. Expected Volatility. The expected volatility is based on historical volatilities of similar entities within our industry which were commensurate with the expected term assumption as described in SAB No. 107. Risk-Free Interest Rate. The risk-free interest rate is based on the interest rate payable onU.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term. Expected Dividends. The expected dividend yield is 0% because we have not historically paid, and do not expect for the foreseeable future to pay, a dividend on our common stock. Stock-based compensation expense was$0.9 million and$1.1 million for the years endedDecember 31, 2019 and 2018, respectively. AtDecember 31, 2019 , we had$0.9 million of unamortized stock-based compensation expense related to unvested service-based stock options, which is expected to be recognized over a remaining weighted-average vesting period of 1.7 years. Derivative liabilities Our convertible notes contained bifurcated conversion features classified as derivative liabilities as the conversion feature does not have a fixed conversion price and conversion will be settled in a variable number of shares. Our convertible notes also contain bifurcated change in control features that were determined to be redemption features and not clearly and closely related to the debt host. We estimated the fair value of the embedded conversion and change in control features at each issuance of convertible promissory notes and at the end of each reporting period using an income approach model. Inputs into this model include the expected time until conversion or change in control and our estimates of the probability of conversion or change in control occurring. There are no such derivatives valued as ofDecember 31, 2019 , due to either the payment or conversion of the related notes. We issued warrants to purchase common stock and we account for our warrants in accordance with FASB ASC Topic 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity ("ASC 815-40"), which is the authoritative guidance on accounting for derivative financial instruments indexed to and potentially settled in a company's own stock. To determine whether a contract is considered indexed to the issuer's own equity, we perform the following two-step analysis: (1) evaluate whether the contract contains any exercise contingencies and, if so, whether they disqualify the contract from being classified as equity, and (2) assess whether the settlement terms are consistent with equity classification. We entered into a Securities Purchase Agreement with certain accredited investors, pursuant to which we issued three series of warrants, Series A Warrants, Series B Warrants and Series C Warrants. The Series A Warrants and Series C Warrants were determined to meet the criteria for equity classification. Upon the closing of the Merger, the Series B Warrants were recognized as a derivative liability as they did not meet the criteria related to equity indexation. We classified the Series B Warrants on our consolidated balance sheet as a derivative liability which was recognized at fair value at each reporting period subsequent to the initial issuance until the warrants were reclassified as equity inNovember 2019 following a final mark to market upon the completion of a reset period pursuant to which the number of shares of common stock underlying the Series B Warrants was increased based on the trading price for the common stock (the "Reset Period"). Changes in the fair value of derivatives were recognized as other income (expense) in the consolidated statements of operations and comprehensive loss. We estimated the fair value of Series B Warrants using the Monte Carlo simulation model. Key fair value inputs included the starting stock price, expected stock price volatility during the Reset Period, and additional shares issued from escrow. Upon conclusion of the Reset Period, we estimated the fair value of the Series B Warrants using a Black-Scholes valuation model. The methodology for measuring fair value is sensitive to the expected stock volatility assumption input mentioned above. Inputs used in the valuation are unobservable and are therefore classified as Level 3 fair value inputs. The use of different valuation techniques or assumptions could result in materially different fair value estimates. See Note 10 in the notes to the consolidated financial statements included in this report for additional information. 88
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Table of Contents Results of Operations Comparison of the Years EndedDecember 31, 2019 and 2018 The following table summarizes the results of our operations for the years endedDecember 31, 2019 and 2018 (in thousands): Year Ended December 31, 2019 2018 Change Operating expenses: Research and development$ 8,086 $ 10,321 $ (2,235) General and administrative 6,077 5,819 258 Total operating expenses 14,163 16,140 (1,977) Loss from operations (14,163) (16,140) 1,977 Other income (expense) Change in fair value of derivative liabilities (3,187) 1,665 (4,852) Loss on debt conversion (341) - (341) Interest income 1 19 (18) Interest expense (1,768) (3,751) 1,983 Other income (expense) (785) (12) (773) Total other income (expense) (6,080) (2,079) (4,001) Net loss$ (20,243) $ (18,219) $ (2,024) Research and development expense Research and development expense decreased by$2.2 million for the year endedDecember 31, 2019 when compared to the year endedDecember 31, 2018 primarily as a result of a net decrease in program development and clinical trial activities of$1.8 million and a net decrease of$0.4 million in other costs. Specifically, expenses related to OCU300 decreased in 2019 by$2.0 million primarily related to preclinical and manufacturing activities in 2018. This decrease was offset by (a) a$0.2 million increase in OCU400 preclinical activities and (b) a$0.1 million net increase in OCU200 preclinical and manufacturing activities. The$0.4 million net decrease in other research and development costs is primarily related to (a) a$0.2 million decrease in employee-related expenses due to a decrease in headcount and (b) a$0.2 million decrease in license fees associated with a license milestone achieved during 2018. General and administrative expense General and administrative expenses increased by$0.3 million , for the year endedDecember 31, 2019 when compared to the year endedDecember 31, 2018 . The increase was primarily due to a$0.7 million increase in professional and consulting fees and a$0.3 million increase in insurance costs, which was offset by a$0.6 million decrease in employee-related expenses due to a decrease in headcount. Change in fair value of derivative liability The change in fair value of derivative liability was a loss of$3.2 million for the year endedDecember 31, 2019 compared to a gain of$1.7 million related to a change in fair value of the derivatives related to the debt instruments for the year endedDecember 31, 2018 . The loss for the year endedDecember 31, 2019 primarily relates to the remeasurement of the Series B Warrant liability. Loss on debt conversion The loss on debt conversion of$0.3 million primarily relates to 2019 conversions of all previously-issued convertible debt. 89
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Table of Contents Interest expense Interest expense was$1.8 million for the year endedDecember 31, 2019 and$3.8 million for the year endedDecember 31, 2018 . The decrease in interest expense was primarily due to the 2019 conversions of all previously-issued convertible debt. Other expense Other expense was$0.8 million the year endedDecember 31, 2019 compared to a de minimis amount for the year endedDecember 31, 2018 . Other expense for the year endedDecember 31, 2019 primarily relates to equity issuance fees associated with the Series B Warrants, which were expensed as incurred. Liquidity and Capital Resources We have not generated any revenue to date and have primarily funded our operations to date through the sale and issuance of common stock and warrants to purchase common stock, proceeds from convertible notes payable, and debt. Specifically, since its inception and throughDecember 31, 2019 , we have raised an aggregate of$51.1 million to fund its operations, of which$39.5 million was from the sale of our common stock and warrants,$10.3 million was from the issuance of convertible notes,$1.1 million was from borrowings under the EB-5 Program, and$0.2 million from grant proceeds. As ofDecember 31, 2019 , we had$7.6 million in cash, cash equivalents and restricted cash. Since our inception, we have devoted substantial resources to research and development and have incurred significant net losses and expect to continue to incur net losses for the foreseeable future. We incurred net losses of approximately$20.2 million and$18.2 million for the year endedDecember 31, 2019 and 2018, respectively. As ofDecember 31, 2019 , we had an accumulated deficit of$51.5 million . In addition, as ofDecember 31, 2019 , we had accounts payable and accrued expenses of$4.2 million and indebtedness of$1.1 million . Although it is difficult to predict future liquidity requirements, we believe that we have sufficient cash and cash equivalents to fund our operations into mid-2020, during which time, we expect to continue our development efforts with respect to our product candidates. We will need to raise additional capital in the future to further the development and commercialization of our other product candidates. Until such time, if ever, that we generate product revenue, we expect to obtain additional financing through the issuance of our common stock, issuance of warrants to purchase company stock, through other equity or debt financings, licensing or sale of assets, or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan and cause us to delay or curtail our operations until such funding is received. The following table shows a summary of our cash flows for the periods indicated (in thousands): Year Ended December 31, 2019 2018 Net cash used in operating activities$ (16,893) $ (11,631) Net cash used in investing activities (2,357) (77) Net cash provided by financing activities 25,066 7,185
Net increase (decrease) in cash, cash equivalents and restricted cash
$ 5,816 $ (4,523) Operating activities Cash used in operating activities was$16.9 million for the year endedDecember 31, 2019 compared with$11.6 million for the year endedDecember 31, 2018 . The increase in cash used in operating activities relates to additional cash used for working capital purposes during 2019, including a significant decrease in accounts payable. Investing activities Cash used in investing activities was$2.4 million for the year endedDecember 31, 2019 compared with$0.1 million for the year endedDecember 31, 2018 . The$2.3 million increase in cash used is primarily related to costs associated with the Merger. 90
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Table of Contents Financing activities Cash provided by financing activities was$25.1 million for the year endedDecember 31, 2019 compared to$7.2 million for the year endedDecember 31, 2018 . This$17.9 million increase is primarily due to the$22.5 million of proceeds, which were issued in connection with theJune 2019 common stock and warrant financing entered into by Former Ocugen andHistogenics with certain accredited investors for an aggregate purchase price of$25.0 million (the "Pre-Merger Financing"),$1.0 million from issuance of the stock subscription agreement, and$0.2 million from issuance of common stock for warrant exercises. These increases were partially offset by a payment of$5.3 million to settle the convertible debt and a decrease in net proceeds of$0.5 million from the issuance of convertible debt. Indebtedness InSeptember 2016 , pursuant to theU.S. Government's Immigrant Investor Program, commonly known as the EB-5 program (the "EB-5 Program"), we entered into an arrangement to borrow up to$10.0 million fromEB5 Life Sciences, L.P. (the "Lender") in$0.5 million increments. Borrowings are at a fixed interest rate of 4.0% and are to be utilized in the clinical development, manufacturing, and commercialization of our products and for our general working capital needs. Outstanding borrowings pursuant to the EB-5 Program become due upon the seventh anniversary of the final disbursement. Amounts repaid cannot be re-borrowed. AtDecember 31, 2019 , there was$1.0 million of principal outstanding under the EB-5 program. Subsequent toDecember 31, 2019 , we borrowed an additional$0.5 million under the arrangement. Funding requirements We expect to continue to incur significant expenses in connection with our ongoing activities, particularly as we continue research and development, including clinical development activities of our product candidates, increase our headcount and add operational, financial and information systems to execute our business plan, maintain, expand and protect our patent portfolio, contract to manufacture our product candidates, and operate as a public company. Our future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to: •the initiation, progress, timing, costs and results of clinical trials for our product candidates; •the outcome, timing and cost of the regulatory approval process for our product candidates by the FDA; •future costs of manufacturing and commercialization; •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 costs of expanding infrastructure and increasing headcount, as well as the higher corporate infrastructure costs associated with becoming a public company; and •the extent to which we in-license or acquire other products, product candidates or technologies. We believe that the existing cash and cash equivalents will be sufficient to fund our operations into mid-2020, during which time we expect to continue our development efforts with respect to our product candidates. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Substantial additional financing will be needed to fund our operations thereafter and to commercially develop any current or future product candidates. We currently do not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. However, our management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include, but are not limited to: public and private placements of equity and/or debt, payments from potential strategic research and development, sale of assets, and licensing and/or collaboration arrangements with pharmaceutical companies or other institutions. There can be no assurance that these future funding efforts will be successful. If we cannot obtain the necessary funding, we will need to delay, scale back or eliminate some or all of our research and development programs? consider other various strategic alternatives, including a merger or sale? or cease operations. If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected. 91
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Table of Contents Off-Balance Sheet Arrangements We did not have 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 theSEC . Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see Note 2 to our consolidated financial statements included in this report. Other Company Information JOBS Act OnApril 5, 2012 , the Jumpstart Our Business Startups Act ("JOBS Act") was enacted. Section 107 of the JOBS Act permits an "emerging growth company" or a "smaller reporting company" to delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies. We plan to avail ourselves of this exemption from new or revised accounting standards as a smaller reporting company and, therefore, we may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies or smaller reporting companies. For so long as we are a "smaller reporting company," we intend to rely on exemptions relating to: (1) providing an auditor's attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) complying with certain requirements that may be adopted by thePublic Company Accounting Oversight Board . Although we remain a smaller reporting company, as ofDecember 31, 2019 , we are no longer an emerging growth company. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Not applicable. Item 8. Financial Statements and Supplementary Data The financial statements required by this item are set forth beginning at page F-1 of this report and are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) (the "Exchange Act"), as ofDecember 31, 2019 . Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in theSEC's rules and forms, and (b) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. 92
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Table of Contents Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by our Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in conformity 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 our assets; •provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and •provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. Under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, our management assessed the effectiveness of our internal control over financial reporting as ofDecember 31, 2019 based on the criteria set forth by theCommittee of Sponsoring Organizations of theTreadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, management concluded that our internal control over financial reporting was effective as ofDecember 31, 2019 . Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. Our Board of Directors has establishedThursday, June 4, 2020 as the date of our 2020 Annual Meeting of Stockholders (the "2020 Annual Meeting"). The 2020 Annual Meeting will be held at the offices ofPepper Hamilton LLP ,400 Berwyn Park ,899 Cassatt Road ,Berwyn, PA 19312, at8:00 a.m. , local time. Stockholders of record at the close of business onTuesday, April 14, 2020 will be entitled to vote at the 2020 Annual Meeting. Because the date of the 2020 Annual Meeting has been advanced by more than 30 calendar days from the date of the preceding year's annual meeting, in accordance with Rule 14a-5(f) under the Exchange Act, we are informing stockholders of certain dates related to the 2020 Annual Meeting. Pursuant to Rule 14a-8 under the Exchange Act, a stockholder intending to present a proposal to be included in the proxy materials for the 2020 Annual Meeting must deliver a proposal in writing to our principal executive offices no later than a reasonable time before we begin printing and mailing the proxy materials for the 2020 Annual Meeting. According to our bylaws, a stockholder must provide notice to the our corporate secretary of proposals intended to be presented at, but not included in the proxy materials for, the 2020 Annual Meeting, including director nominations for election to our Board of Directors, in a timely manner. Under our bylaws, in order to be timely, in the event that the date of the annual meeting is advanced more than 30 days prior to or delayed more than 30 days after the anniversary of the preceding year's annual meeting, notice by the stockholder must be delivered to us by the close of business on the later of (x) the 90th day prior to such annual meeting or (y) the 10th day following the day on which public announcement of the date of such meeting is first made. As such, the new deadline for submission of proposals to be included in the proxy materials or otherwise to be considered at the 2020 Annual Meeting is the close of business onMonday, April 6, 2020 , which we consider a reasonable time before we will begin printing and mailing proxy materials and is the 10th day following the date of filing of this Annual Report. Proposals 93
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Table of Contents should be addressed to: Corporate Secretary,Ocugen, Inc. ,5 Great Valley Parkway , Suite 160,Malvern, PA 19355. Any such proposal must (i) meet the requirements set forth in the rules and regulations of theSEC in order to be eligible for inclusion in the proxy materials for the 2020 Annual Meeting and (ii) contain the information specified in, and otherwise comply with, our bylaws. We may omit any proposal from the proxy materials that does not comply with theSEC's rules. Because of the uncertainties surrounding the impact of the COVID-19 pandemic, we are planning for the possibility that the 2020 Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance of the 2020 Annual Meeting, and details on how to participate in the webcast will be set forth in a press release issued by us and available at www.ocugen.com. 94
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