Title of each class

Trading
symbol(s)

Name of each exchange
on which registered

Common Stock, par value $0.01 per share

OCGN

The Nasdaq Stock Market LLC

(The Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act


Large accelerated filer	o☐	Accelerated filer	o☐
Non-accelerated Filer	x☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x☒

As of ~~May 1, 2020,~~April 30, 2021, there were ~~74,549,048~~198,228,533 outstanding shares of the registrant’s common stock, $0.01 par value per share.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2020~~2021

Unless the context otherwise requires, references to the “Company,” “we,” ~~“our”~~“our,” or “us” in this report refer to Ocugen, Inc. and its subsidiaries, and references to “OpCo” refer to Ocugen OpCo, Inc., the Company’s wholly owned subsidiary.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ~~may contain~~contains forward-looking statements ~~within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),~~that involve substantial risks and ~~Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about Ocugen and its subsidiaries. These forward-looking~~uncertainties. All statements, ~~are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not~~other than statements of historical ~~fact,~~facts contained in this Quarterly Report on Form 10-Q regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, and ~~can be identified by the use~~objectives of management are forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “projects”, “plans”, “goal”, “targets”, “potential”, “estimates”, “pro forma”, “seeks”, “intends” or “anticipates” or the negative thereof or comparable terminology. Forward-lookingstatements. These statements ~~include discussions of strategy, financial projections, guidance~~involve known and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of various transactions, and statements about the future performance, operations, products and services of Ocugen and its subsidiaries. We caution our stockholdersunknown risks, uncertainties, and other ~~readers not to place undue reliance on such statements.~~

~~You should read this report and the documents filed by the Company with the SEC completely and with the understanding~~important factors that may cause our actual ~~future~~ results, ~~may~~performance, or achievements to be materially different from ~~what we currently expect. Our business and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual~~any future results, ~~and experience may materially differ from those contained in any~~performance, or achievements expressed or implied by the forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," “will,” “would,” or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties, and other factors, ~~that could cause actual results~~many of which cannot be predicted with accuracy and ~~experience to differ from those projected~~some of which might not even be anticipated.

The forward-looking statements in this Quarterly Report on Form 10-Q and contained in the Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on March 19, 2021 (the "2020 Annual Report") include, ~~but are not limited to:~~among other things, statements about:

•our estimates regarding expenses, future revenue, capital requirements, and timing and availability of and the ~~risk that Ocugen continues to incur significant losses from operations and continues to incur net losses;~~need for additional financing;

•~~the risk that Ocugen may encounter unforeseen expenses, difficulties, complications, delays~~our ability to obtain sufficient additional capital to continue to advance our product candidates and ~~other known and unknown factors;~~our preclinical programs;

•our activities with respect to COVAXIN, our vaccine candidate for the ~~risk that as a result~~prevention of ~~adjustments to~~COVID-19, in collaboration with Bharat Biotech International Limited (“Bharat Biotech”), including our plans and expectations regarding clinical development, manufacturing, pricing, regulatory review and compliance, reliance on third parties, and commercialization, if authorized or ~~exercise of the Pre-Merger Financing Warrants, stockholders of the combined company could be substantially and materially diluted;~~approved;

•the extent to which health epidemics and other outbreaks of communicable diseases, including the ~~recent outbreak of a novel strain of the coronavirus which causes a serious respiratory condition known as~~ COVID-19 pandemic, could disrupt ~~Ocugen's~~our business and operations;

•the uncertainties associated with the clinical development and regulatory authorization or approval of product candidates, including potential delays in the commencement, enrollment, and completion of clinical trials;

•~~risks related to the inability of the Company to obtain sufficient additional capital to continue to advance these product candidates and its preclinical programs;~~

•~~uncertainties in obtaining successful clinical results for product candidates and unexpected costs that may result therefrom;~~

•~~risks related to the failure~~our ability to realize any value from product candidates and preclinical programs being developed and anticipated to be developed in light of inherent risks and difficulties involved in successfully bringing product candidates to market and the risk that products will not achieve broad market acceptance;

•uncertainties in obtaining successful clinical results for product candidates and unexpected costs that may result therefrom;

•our ability to maintain our collaboration with Bharat Biotech and to establish additional collaborations and/or partnerships;

•our ability to comply with regulatory schemes applicable to our business and other regulatory developments in the United States and foreign countries;

•the performance of third-parties upon which we depend, including third-party contract research organizations, and third-party suppliers, manufacturers, group purchasing organizations, distributors, and logistics providers;

•the pricing and reimbursement of our product candidates, if authorized or approved;

•our ability to obtain and maintain patent protection, or obtain licenses to intellectual property and defend our intellectual property rights against third-parties;

•our ability to maintain our relationships, profitability, and contracts with our key commercial partners;

•our ability to recruit or retain key scientific, technical, commercial, and management personnel or to retain our executive officers;

•our ability to comply with stringent U.S. and foreign government regulation in the manufacture of pharmaceutical products, including Good Manufacturing Practice compliance and other relevant regulatory authorities; and

•~~the~~ other ~~risk factors~~matters discussed under the heading “Risk Factors” contained in ~~the Annual~~this Quarterly Report on Form ~~10-K filed with~~10-Q, the ~~SEC on March 27,~~ 2020 ~~(the "2019~~ Annual ~~Report"),~~Report, and in any other documents ~~Ocugen files~~we file with the SEC.

~~You should assume that~~

We may not actually achieve the ~~information appearing~~plans, intentions, or expectations disclosed in ~~this report is accurate as of its date only. Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any~~our forward-looking statements, ~~made by us or on our behalf,~~and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q and in the 2020 Annual Report, particularly under “Risk Factors,” that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, collaborations, or investments we may make.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements. ~~Further, any forward-looking statement speaks only~~

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Solely for convenience, tradenames and trademarks referred to in this Quarterly Report on ~~which it is made. New factors emerge from time~~Form 10-Q appear without the ® or TM symbols, but those references are not intended to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those containedindicate, in any ~~forward-looking statements.~~way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these tradenames or trademarks, as applicable. All ~~written~~tradenames, trademarks, and service marks included or ~~oral forward-looking statements attributable to us or any person acting on our behalf made after the date of this report are expressly qualified in their entirety~~incorporated by ~~the risk factors and cautionary statements contained~~reference in this ~~report. Unless legally required, we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after~~Quarterly Report on Form 10-Q are the ~~date~~property of ~~this report or to reflect the occurrence of unanticipated events.~~their respective owners.

See accompanying notes to condensed consolidated financial statements.

Common Stock Treasury Stock Additional
Paid in Capital Accumulated
Other
Comprehensive Income Accumulated
Deficit Total
Shares Amount
Balance at December 31, 2018 4,960,552 $ 49,606 $ — $ 18,477,598 $ 451 $ (31,237,194) $ (12,709,539)
Stock-based compensation expense — — — 415,202 — — 415,202
Foreign currency translation adjustment — — — — (282) — (282)
Net loss — — — — — (6,312,606) (6,312,606)
Balance at March 31, 2019 4,960,552 $ 49,606 $ — $ 18,892,800 $ 169 $ (37,549,800) $ (18,607,225)


	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock			Common Stock			Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Total
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2019	7	$	0	0	$	0	52,746,728	$	528	$	(48)	$	62,019	$	(51,480)	$	11,019
Stock-based compensation expense	—	—		—	—		—	—		—		222		—		222
Net loss	—	—		—	—		—	—		—		—		(3,944)		(3,944)
Balance at March 31, 2020	7	$	0	0	$	0	52,746,728	$	528	$	(48)	$	62,241	$	(55,424)	$	7,297

See accompanying notes to condensed consolidated financial statements.

1. Nature of Business

Ocugen, Inc. ~~(formerly known as Histogenics Corporation)~~, together with its wholly owned subsidiaries (“Ocugen” or the “Company”), is a ~~clinical-stage~~ biopharmaceutical company focused on ~~discovering,~~ developing ~~and commercializing transformative~~gene therapies to ~~treat the whole eye.~~cure blindness diseases and developing a vaccine to save lives from COVID-19. The Company is located in Malvern, Pennsylvania, and manages its business as ~~one~~1 operating segment.

~~Ocugen is developing OCU300,~~COVID-19 Vaccine

In February 2021, the Company entered into a Co-Development, Supply and Commercialization Agreement (the "Covaxin Agreement") with Bharat Biotech International Limited ("Bharat Biotech"), pursuant to which the Company obtained an exclusive right and license under certain of Bharat Biotech's intellectual property rights, with the right to grant sublicenses to develop, manufacture, and commercialize COVAXIN for the prevention of COVID-19 in humans in the United States, its territories and possessions (the “Ocugen Covaxin Territory”). COVAXIN is a ~~small molecule therapeutic~~whole-virion inactivated COVID-19 vaccine candidate and is formulated with the inactivated SARS-CoV-2 virus, an antigen, and an adjuvant. COVAXIN requires a 2-dose vaccination regimen given 28 days apart and is stored in standard vaccine storage conditions (2-8°C).

COVAXIN has been granted approval for emergency use in India and millions have been dosed to date. The Phase 1 and Phase 2 clinical trials conducted in India reported strong Immunoglobulin G ("IgG") responses against the spike protein, receptor-binding domain ("RBD"), and the nucleocapsid protein of the SARS-CoV-2 virus, along with strong cellular responses. Strong cellular responses are necessary for memory and long-term durability of vaccines. Both the Phase 1 and Phase 2 clinical trials were published in the Lancet. Bharat Biotech is currently inconducting a Phase 3 ~~development~~clinical trial in India. Enrollment in the Phase 3 clinical trial is complete. In April 2021, COVAXIN demonstrated positive results in the second interim analysis of the Phase 3 clinical trial showing a vaccine efficacy in mild, moderate, and severe COVID-19 disease of 78%, efficacy against severe COVID-19 disease alone of 100%, and efficacy against asymptomatic COVID-19 infection of 70%. The 78% efficacy result represents a point estimate of vaccine efficacy with a 95% confidence interval of 61% to 88% against mild, moderate, and severe COVID-19 disease. In an in vitro study conducted by the Indian Council of Medical Research ("ICMR")-National Institute of Virology, COVAXIN demonstrated potential effectiveness against the Brazilian variant of SARS-CoV-2, B.1.1.28.2, which contains the E484K mutation found in New York. An additional in vitro study conducted by the ICMR-National Institute of Virology suggested that COVAXIN was effective against the U.K. variant, B.1.1.7, as well as the Indian double mutant variant, B.1.617. These studies suggest that COVAXIN vaccination may be effective against infection from multiple SARS-CoV-2 variants.

The Company is currently evaluating the clinical and regulatory path for COVAXIN in the ~~treatment of symptoms associated with ocular graft-versus-host disease~~United States including obtaining Emergency Use Authorization ("~~oGVHD"). OCU300 has received orphan drug designation ("ODD"~~EUA") from the U.S. Food and Drug Administration (the "FDA") and, eventually, biologic license application (“BLA”) approval in the United States, as well as the Company's commercialization strategy, if authorized or approved. The Company has initiated discussions with the FDA regarding the development of COVAXIN and EUA. Consistent with the FDA guidance document on EUA for vaccines to prevent COVID-19, the company has submitted key information and data to date (including preclinical studies, chemistry, manufacturing, and controls ("~~FDA"~~CMC"), and itclinical studies) as a “Master File” for FDA review and input prior to a planned EUA submission. The Company is currently waiting for additional data from Bharat Biotech from the ~~first~~ongoing Phase 3 clinical trial for an EUA submission. See Note 3 for additional information about the terms, rights, and ~~only product candidate to receive that designation for~~obligations under the ~~treatment of symptoms associated with oGVHD. oGVHD~~Covaxin Agreement.

Modifier Gene Therapy Platform

The Company is a severe chronic autoimmune disease that can result in light sensitivity, excessive ocular redness, severe ocular pain and, ultimately, vision impairment. OCU300 is formulated using our proprietary nanoemulsion technology, OcuNanoE—Ocugen’s ONE Platform™.

~~Ocugen is also~~ developing a breakthrough modifier gene therapy platform to generate therapies designed to fulfill unmet medical needs in the area of retinal diseases, including inherited retinal ~~diseases. Ocugen's~~diseases ("IRDs") and dry age-related macular degeneration ("AMD"). The Company's modifier gene therapy platform is based on nuclear hormone receptors ~~("NHRs"~~(“NHRs”), which have the potential to restore homeostasis, the basic biological processes in the retina. Unlike single-gene replacement therapies, which only target ~~one~~1 genetic mutation, the Company believes that its gene therapy platform, through its use of NHRs, represents a novel approach in that it may address multiple retinal diseases with ~~one~~1 product. ~~Ocugen's~~

The Company believes that OCU400, its first product candidate being developed with its modifier gene therapy ~~candidate,~~platform, has the potential to be broadly effective in restoring retinal integrity and function across a range of genetically diverse IRDs, including retinitis pigmentosa ("RP") and leber congenital amaurosis ("LCA"). OCU400 has received ~~two ODDs~~4 Orphan Drug

Designations ("ODDs") from the FDA ~~one~~ for the treatment of certain disease genotypes: nuclear receptor subfamily 2 group E member 3 ("NR2E3") ~~mutation-associated retinal diseases and the other for the treatment of~~, centrosomal protein 290 ("CEP290"), rhodopsin ("RHO"), and phosphodiesterase 6B ("PDE6ß") mutation-associated inherited retinal ~~diseases. Ocugen~~degenerations. The Company is planning to initiate a2 Phase 1/2a clinical ~~trial~~trials for OCU400 in the United States in the second half of 2021. ~~Ocugen's~~OCU400 additionally received Orphan Medicinal Product Designation ("OMPD") from the European Commission ("EC"), based on the recommendation of the European Medicines Agency ("EMA"), for RP and LCA in February 2021, which the Company believes further supports the potential broad spectrum application of OCU400 to treat many IRDs. The Company is currently evaluating options to commence OCU400 clinical trials in Europe in 2022. The Company's 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").~~AMD. This candidate is currently in preclinical development. The Company is planning to initiate a Phase 1/2a clinical trial for OCU410 in 2022.

~~Ocugen~~Novel Biologic Therapy for Retinal Diseases

The Company is ~~additionally in~~also conducting preclinical development for ~~a novel~~its biologic product candidate, OCU200. OCU200 is a novel fusion protein designed to treat diabetic macular edema ("DME"), diabetic retinopathy ("DR"), and wet AMD. The Company had a pre-Investigational New Drug ("IND") meeting with the FDA in November 2020 and received guidance on IND-enabling preclinical studies to support the Phase 1/2a study. The Company expects to initiate IND-enabling preclinical studies for OCU200 in 2021 and plans to initiate a Phase 1/2a clinical trial for OCU200 in 2022, and plans to expand the therapeutic applications of OCU200 beyond DME, DR, and wet AMD to potentially include macular edema following retinal vein occlusion and myopic choroidal neovascularization.

~~Merger with Histogenics~~

On September 27, 2019, the Company completed its reverse merger with Ocugen OpCo, Inc. (“OpCo”) in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of April 5, 2019, by and among Histogenics Corporation ("Histogenics"), OpCo and Restore Merger Sub, Inc., a wholly owned subsidiary of Histogenics (“Merger Sub”), as amended (the “Merger Agreement”), pursuant to which Merger Sub merged with and into OpCo, with OpCo surviving as a wholly owned subsidiary of Histogenics (the “Merger”). Immediately after completion of the Merger, Histogenics changed its name to Ocugen, Inc. and the business conducted by Ocugen, Inc. became the business conducted by OpCo. OpCo is deemed to be the accounting acquirer. Accordingly, the historical financial statements of OpCo became the Company’s historical financial statements, including the comparative prior periods. See Note 3 for additional information.

~~Reverse Stock Split~~

In connection with, and immediately prior to the completion of the Merger, Histogenics effected a reverse stock split of the common stock, at a ratio of 1-for-60 (the ‘‘Reverse Stock Split’’). Under the terms of the Merger Agreement, the Company issued common stock to OpCo’s stockholders at an exchange rate of 0.4794 shares of common stock, after taking into account the Reverse Stock Split, for each share of OpCo’s common stock outstanding immediately prior to the Merger.

The capital structure, including the number of shares of common stock issued appearing in the condensed consolidated balance sheets for the periods presented, reflects that of Ocugen. All references in the condensed consolidated financial statements to the number of shares and per-share amounts of common stock have been retroactively restated to reflect the exchange rate.

The Company has incurred recurring losses and negative cash flows from operations since inception and has funded its operating losses through the sale of common stock, warrants to purchase common stock, the issuance of convertible notes, and debt. The Company incurred net losses of approximately $3.9 million and $6.3 million for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, the Company had an accumulated deficit of $55.4 million and cash, cash equivalents and restricted cash totaling $3.3 million.

The Company has a limited operating history and its prospects are subject to risks, expenses and uncertainties frequently encountered by companies in its industry. The Company intends to continue its research and development efforts for its product candidates, which will require significant funding. If the Company is unable to obtain additional financing in the future or research and development efforts require higher than anticipated capital, there may be a negative impact on the financial viability of the Company. The Company plans to increase working capital by raising additional capital through public and private placements of equity and/or debt, payments from potential strategic research and development arrangements, sale of assets, and licensing and/or collaboration arrangements with pharmaceutical companies or other institutions. Such financing may not be available at all, or on terms that are favorable to the Company. While management of the Company believes that it has a plan to fund ongoing operations, its plan may not be successfully implemented. Failure to generate sufficient cash flows from operations, raise additional capital through one or more financings, or appropriately manage certain discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

As a result of these factors, together with the anticipated increase in spending that will be necessary to continue to develop the Company’s products, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued. The condensed consolidated financial statements do not contain any adjustments that might result from the resolution of any of the above uncertainties.2022.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements included herein have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and under the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim reporting. The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, that are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosures of the Company normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted under the SEC’s rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto for the year ended December 31, ~~2019,~~2020, included in the Company's Annual Report on Form 10-K ~~for~~filed with the ~~fiscal year ended December 31, 2019~~SEC on March 19, 2021 (the ~~"2019~~"2020 Annual Report").

The condensed consolidated financial statements include the accounts of Ocugen, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with current period presentation.

In preparing the condensed consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions primarily include those used in the ~~estimation of clinical trial~~accounting for research and development accruals and the ~~valuation~~fair value measurement of ~~share-based payment arrangements~~equity instruments.

Collaboration Arrangements

The Company assesses whether collaboration agreements are subject to Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 808, Collaborative Arrangements (“ASC 808”), based on whether they involve joint operating activities and ~~embedded conversion features on~~whether both parties have active participation in the ~~convertible notes.~~

~~Asset Held for Sale~~

~~An asset is considered~~arrangement and are exposed to ~~be held for sale when all of~~significant risks and rewards. To the ~~following criteria are met: (i) management commits to a plan to sell the asset; (ii) it is unlikely~~extent that the ~~disposal plan~~arrangement falls within the scope of ASC 808, the Company assesses whether the payments between the Company and the collaboration partner are subject to other accounting literature. If payments from the collaboration partner represent consideration from a customer, the Company accounts for those payments within the scope of FASB ASC Topic 606, Revenue from Contracts with Customers. However, if the Company concludes that its collaboration partner is not a customer, the Company will ~~be significantly modified or discontinued; (iii)~~record royalty payments received as collaboration revenue in the ~~asset is available for~~period in which the underlying sale occurs and record expenses and expense reimbursements as either research and

~~immediate sale~~development expense or general and administrative expense, or a reduction thereof, based on the underlying nature of the expense or expense reimbursement.

Exit and Disposal Activities

The Company records liabilities for one-time termination benefits in ~~its present condition;~~accordance with FASB ASC Topic 420, Exit and Disposal Cost Obligations ("ASC 420"). In accordance with ASC 420, an arrangement for one-time termination benefits exists at the date the plan of the termination meets the following criteria: (i) management commits to a plan of termination, (ii) the plan identifies the impacted employees and expected completion date, (iii) the plan identifies the terms of the benefits arrangement, (iv) ~~actions~~it is unlikely significant changes to the plan will be made or the plan will be withdrawn, and (v) the plan has been communicated to employees. Costs for one-time termination benefits in which the employee is required to ~~complete~~render service until termination in order to receive the ~~sale~~benefits, are recognized ratably over the future service period.

The Company records liabilities for employee termination benefits covered by ongoing benefit arrangements in accordance with FASB ASC Topic 712, Compensation — Nonretirement Postemployment Benefits ("ASC 712"). In accordance with ASC 712, costs for termination benefits under ongoing benefits arrangements are recognized when management has committed to a plan of termination and the costs are probable and estimable.

Severance-related charges, once incurred, are recognized as either research and development expense or general and administrative expense within the condensed consolidated statements of operations and comprehensive loss depending on the job function of the asset have been initiated; (v) sale of the asset is probable and the completed sale is expected to occur within one year; and (vi) the asset is actively being marketed for sale at a price that is reasonable given its current market value.

A long-lived asset classified as held for sale is measured at the lower of its carrying amount or fair value less cost to sell. If the long-lived asset is newly acquired, the carrying amount of the long-lived asset is established based on its fair value less cost to sell at the acquisition date. A long-lived asset is not depreciated or amortized while it is classified as held for sale, and an impairment loss would be recognized to the extent the carrying amount exceeds the asset's fair value less cost to sell.

As of March 31, 2020, Ocugen had an intangible asset held for sale acquired from Histogenics. The intangible asset qualified as held for sale as of the date of the reverse asset acquisition and is carried at its original fair value less cost to sell of $7.0 million. See Note 3 for additional information.employee.

Fair Value Measurements

The company follows the provisions of the ~~Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)~~FASB ASC Topic 820, Fair Value Measurements (“ASC 820”), which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value, and expands disclosure of fair measurements.

The carrying value of certain financial instruments, including cash and cash equivalents, accounts payable, and accrued expenses approximates their fair values due to the short-term nature of these instruments.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

The company had derivative instruments that were fair valued on a recurring basis using Level 3 inputs during the three months ended March 31, 2019. There were no derivative instruments fair valued on a recurring basis using Level 3 inputs at March 31, 2020 or December 31, 2019. As of March 31, ~~2020,~~2021, the Company ~~estimates~~believes the fair ~~value~~values using Level 2 inputs of the ~~note issued to EB5 Life Sciences, L.P.~~PPP Note and the borrowings under ~~a loan agreement with~~ the ~~Company was $1.0 million.~~EB-5 Loan Agreement (both as defined in Note 7) approximate their carrying values. See Note 67 for ~~more~~additional information.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. Cash and cash equivalents include bank demand deposits, marketable securities with maturities of three months or less at purchase, and money market funds that invest primarily in certificates of deposit, commercial paper, and ~~United States~~U.S. government and ~~United States~~U.S. government agency obligations. The Company’s restricted cash balance consists of cash held to collateralize a corporate credit card account.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash in the condensed consolidated balance sheets to the total amount shown in the condensed consolidated statements of cash ~~flows:~~flows (in thousands):

Property and Equipment, Net

~~Table~~Property and equipment is recorded at cost. Significant additions or improvements are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. Gains and losses on disposal of ~~Contents~~

assets are included in the condensed consolidated statements of operations and comprehensive loss. Depreciation is calculated using the straight-line method and is recognized over the expected useful life of the underlying asset. The Company's property and equipment includes office equipment, lab equipment, leasehold improvements, and a right-of-use asset under a financing lease. The Company's office equipment includes computers and other office technology equipment with a useful life of five years as well as furniture and fixtures with a useful life of seven years. The Company's lab equipment has a useful life of five years. Leasehold improvements are amortized over the shorter of their useful lives or the remaining lease term. If a leasehold improvement transfers ownership to the Company at the end of the lease term, the leasehold improvement is amortized over its useful life. The right-of-use asset under the Company's financing lease is amortized over five years, which represents the estimated useful life of the underlying leased equipment.

The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The ~~Company has~~Company’s current and historical lease agreements ~~which~~ include lease and non-lease components, which the Company has elected not to account for ~~as a single lease component~~separately for all classes of underlying assets. Lease expense for variable lease components ~~are~~is recognized when the obligation is probable.

Operating leases are included in other assets and operating lease obligations on the Company’s condensed consolidated balance sheets. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease ~~term.~~term and recognized as research and development expense or general and administrative expense based on the underlying nature of the expense. The Company primarily leases real estate ~~which are~~ classified as operating leases. FASB ASC Topic 842,Leases ("ASC 842") requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. ~~As an~~The implicit interest rate is not readily determinable in the Company’s operating leases therefore the incremental borrowing rate is used based on the information available at the commencement date in determining the present value of lease payments.

The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. ~~Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.~~

Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, and amounts probable to be payable under the exercise of ~~the Company~~an option to purchase the underlying asset if reasonably certain.

Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the event, activity, or circumstance ~~in the lease agreement on which those payments are assessed as~~is probable. Variable lease payments include the Company's proportionate share of certain utilities and other operating expenses and are presented as operating expenses in the Company’s condensed consolidated statements of operations and comprehensive loss in the same line item as expense arising from fixed lease payments.

Stock-based compensation

~~Ocugen~~The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, ~~Compensation—~~Compensation — Stock Compensation (“ASC 718”). The Company has issued stock-based compensation awards consisting of stock options and restricted stock units ("RSUs"). ASC 718 requires all stock-based payments, ~~to employees,~~ including grants of ~~employee~~ stock options and ~~restricted stock units and modifications to existing agreements,~~RSUs to be recognized in the condensed consolidated statements of operations and comprehensive loss based on their grant date fair values. ~~Ocugen~~The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted. ~~Ocugen recognized~~For RSUs, the fair value of the RSUs is determined by the Company’s market price of a share of common stock at the grant date. The Company recognizes forfeitures as they occur.

~~Ocugen’s~~The Company’s stock-based awards are subject to service-based vesting conditions. Compensation expense related to awards ~~to employees and directors~~granted 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. Stock-based awards generally vest over a one to three year requisite service period and have a contractual term of 10 years. Shares issued upon stock option exercise are newly issued common shares.

Estimating the fair value of options requires the input of subjective assumptions, including the expected life of the option, stock price volatility, the risk-free interest rate, and expected dividends. The assumptions used in ~~Ocugen’s~~the Company’s Black-Scholes option-pricing model represent management’s 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, ~~Ocugen’s~~the Company’s stock-based compensation expense could be materially different in the future.

Recently Adopted Accounting Standards

In ~~August 2018,~~December 2019, the FASB issued ~~ASU~~Accounting Standards Update ("ASU") No. ~~2018-13,~~2019-12, ~~Fair Value Measurement~~Income Taxes (Topic ~~820)~~740): ~~Disclosure Framework—Changes to~~Simplifying the ~~Disclosure Requirements~~Accounting for ~~Fair Value Measurement~~Income Taxes. This standard ~~modifies~~removes certain ~~disclosure requirements on fair value measurements~~exceptions for recognizing deferred taxes for investments, performing intraperiod allocations, and calculating income taxes in interim periods. This standard also adds guidance to reduce complexity in certain areas, including recognizing franchise tax, recognizing deferred taxes for tax goodwill, allocating taxes to the members of a consolidated group, and recognizing the effect of enacted changes in tax laws or rates during an interim period. This standard was effective for the Company on January 1, ~~2020.~~2021. The adoption of this standard did not have a material impact on the Company's ~~disclosures.~~condensed consolidated financial statements.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40). This standard will have an effective and transition date of January 1, 2024. Early adoption is currently permitted. This standard simplifies an issuer's accounting for convertible instruments by eliminating two of the three models that require separate accounting for embedded conversion features as well as simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. This standard also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of potential share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. The standard requires new disclosures about events that occur during the reporting period and cause conversion contingencies to be met and about the fair value of a public business entity's convertible debt at the instrument level, among other things. The Company does not currently expect the adoption of this standard to have a material impact on the Company's condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial ~~Instruments—~~Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU No. 2016-13, which have the same effective date and transition date of January 1, 2023. These ~~standards~~ require that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, these standards now require allowances to be recorded instead of reducing the amortized cost of the investment. These standards limit the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. The Company does not currently expect the adoption of these standards to have a material impact on ~~its~~the Company's condensed consolidated financial statements.

~~In December 2019, the FASB issued ASU No. 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.~~ ~~This standard will have an effective date and transition date~~Table of January 1, 2021. This standard removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocations and calculating income taxes in interim periods. This standard also adds guidance to reduce complexity in certain areas, including recognizing franchise tax, recognizing deferred taxes for tax goodwill, allocating taxes to the members of a consolidated group and recognizing the effect of enacted changes in tax laws or rates during an interim period. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.Contents

3. ~~Merger~~License and ~~Financing~~Development Agreements

~~Pre-Merger Financing~~

In ~~June 2019, OpCo and Histogenics~~February 2021, the Company entered into the Covaxin Agreement with Bharat Biotech to co-develop COVAXIN, a ~~Securities Purchase Agreement (as amended,~~whole-virion inactivated COVID-19 vaccine being developed to prevent COVID-19 infection, for the ~~"Financing SPA") with certain accredited investors (the "Investors").~~U.S. market. Pursuant to the ~~Financing SPA, among~~Covaxin Agreement, the Company obtained an exclusive right and license under certain of Bharat Biotech’s intellectual property rights, with the right to grant sublicenses, to develop, manufacture, and commercialize COVAXIN in the Ocugen Covaxin Territory. In consideration of the license and other ~~things, (i) immediately prior~~rights granted by Bharat Biotech to the ~~Merger, OpCo issued 2.2 million shares~~Company, the parties agreed to share any profits generated from the commercialization of ~~common stock~~COVAXIN in the Ocugen Covaxin Territory, with the Company retaining 45% of such profits, and Bharat Biotech receiving the balance of such profits. The Covaxin Agreement is a collaboration arrangement within the scope of ASC 808.

Under the Covaxin Agreement, the Company and Bharat Biotech will collaborate to develop COVAXIN for their respective territories. Except with respect to U.S. manufacturing rights under certain circumstances as described below, the Company has the exclusive right and is solely responsible for researching, developing, manufacturing, and commercializing COVAXIN for the Ocugen Covaxin Territory. Bharat Biotech has the exclusive right and is solely responsible for researching, developing, manufacturing, and commercializing COVAXIN outside of the Ocugen Covaxin Territory.

Bharat Biotech has agreed to provide to the ~~Investors, (ii) on October 4, 2019,~~Company all preclinical and clinical data, and to transfer to the Company certain proprietary technology owned or controlled by Bharat Biotech, that is necessary for the successful commercial manufacture and supply of COVAXIN to support commercial sale in the Ocugen Covaxin Territory, including pursuant to any EUA for the Ocugen Covaxin Territory granted by the FDA. In certain circumstances set forth in the Covaxin Agreement, and until the Company is capable and primarily responsible for the manufacture and supply of COVAXIN for the Ocugen Covaxin Territory, Bharat Biotech has the exclusive right to manufacture COVAXIN for the Ocugen Covaxin Territory and is responsible for manufacturing and supplying clinical testing materials required for the Company’s development activities, and all of the Company’s requirements of commercial quantities of COVAXIN. The parties expect to enter into supply agreements setting forth the terms of such supply. Bharat Biotech has agreed to provide a specified minimum number of doses in calendar year 2021. On March 18, 2021, the Company issued ~~2.2 million~~ shares of Series B Convertible Preferred Stock (as defined in Note 8) as an advance payment for the ~~Company's common stock~~supply of COVAXIN to be provided by Bharat Biotech under an expected future supply agreement. See Note 8 for additional information about the Series B Convertible Preferred Stock issuance to Bharat Biotech.

The Covaxin Agreement continues in effect for the commercial life of COVAXIN, subject to the ~~Investors and (iii) on October 4, 2019, the Company issued three series of warrants to purchase shares~~earlier termination of the Company’s common stock (the “Series A Warrants,” the “Series B Warrants” and the “Series C Warrants” and collectively, the “Pre-Merger Financing Warrants”) in exchange for an aggregate purchase price of $25.0 million.

~~Merger with Histogenics~~

~~On September 27, 2019, the Company completed the Merger~~Covaxin Agreement in accordance with ~~the terms~~its terms. The Covaxin Agreement also contains customary representations and warranties made by both parties, and customary provisions relating to indemnification, limitation of liability, confidentiality, information and data sharing, and other matters.

4.Property and Equipment

The following table provides a summary of the ~~Merger Agreement. The Merger was structured~~major components of property and equipment as ~~a stock-for-stock transaction whereby all of OpCo’s outstanding shares of common stock and securities convertible into or exercisable for OpCo’s common stock were converted into~~reflected on the ~~right to receive Histogenics’ common stock and securities convertible into or exercisable for Histogenics’ common stock.~~condensed consolidated balance sheets (in thousands):


	March 31, 2021		December 31, 2020
Office equipment	$	221	$	166
Lab equipment	545		452
Leasehold improvements	158		177
Financing lease right-of-use asset	64		64
Total property and equipment	988		859
Less: accumulated depreciation	(226)		(226)
Total property and equipment, net	$	762	$	633

~~In accordance with ASC Topic 805,~~ ~~Business Combinations~~5. ~~(“ASC 805”)~~,Leases the Company concluded that, while Histogenics is the legal acquirer, OpCo is the accounting acquirer due to the fact that (i) OpCo’s shareholders have the majority of the voting rights in Ocugen, (ii) OpCo holds all of the board seats of the combined company and (iii) OpCo management holds all key positions in the management of the combined company.

Operating Leases

The Company has ~~further concluded that Histogenics did not meet~~commitments under an operating lease with WPT Land 2 LP (the “Landlord”) for certain facilities used in its operations including for the ~~definition~~use of ~~a business under ASC 805 due to the fact that substantially all of the fair value of the gross assets disposed of is concentrated~~laboratory, office, and storage space located in ~~a single identifiable asset or a group of similar identifiable assets. Therefore, the Merger was accounted for as a reverse asset acquisition.~~

~~In connection with the Merger, on May 8, 2019, Histogenics entered into an asset purchase agreement~~Malvern, Pennsylvania (the ~~“Asset Purchase~~“Lease Agreement”) ~~with Medavate Corp., a Colorado corporation (“Medavate”), pursuant to which Histogenics agreed to sell substantially all of its assets relating to its NeoCart~~^® program, including, without limitation, intellectual property, business and license agreements and clinical trial data in return for a cash payment of $6.5 million. On September 26, 2019, the parties entered into an amendment to the Asset Purchase Agreement whereby the closing date was amended to October 4, 2019. On October 4, 2019, the parties entered into a second amendment (the “Second Amendment”) to the Asset Purchase Agreement whereby the purchase price was increased to $7.0 million under the Asset Purchase Agreement and the closing date of the Asset Purchase. The Lease Agreement was ~~revised from October 4, 2019~~determined to have two business days after Medavate obtains financing in an amount no less than the purchase price (the “Closing Date”). The Second Amendment further provides that if the Closing Date does not occur on or prior to October 31, 2019, Ocugen may choose to terminate the Asset Purchase Agreement without recourse and, if Ocugen does not terminate the Asset Purchase Agreement, the purchase price shall increase 10%lease components per ~~month (or any portion~~ASC 842, a laboratory space lease

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~~thereof) between October 31, 2019~~component (the "Initial Premises") and an office, storage, and future expanded laboratory space lease component (the "Expansion Premises"), with varying commencement dates. The Initial Premises commencement date occurred in December 2020 and the ~~Closing Date.~~Expansion Premises commencement date occurred in January 2021. The ~~Closing Date did~~Lease Agreement has an initial term of seven years and the Company has the option to extend the Lease Agreement for 1 additional five year term. The option for extension has been excluded from the lease term (and lease liability) for the Lease Agreement as it is not ~~occur~~reasonably certain that the Company will exercise such option.

The Company had a former lease agreement with the Landlord for the Company's former office space. Pursuant to the terms of the Lease Agreement, the Company terminated the former lease agreement with the Landlord without penalty upon the commencement of the Expansion Premises in January 2021.

The components of lease expense were as follows (in thousands):


	Three months ended March 31,
	2021		2020
Operating lease cost	$	68	$	48
Variable lease cost	30		21
Total lease cost	$	98	$	69

Supplemental balance sheet information related to leases was as follows (in thousands):


	March 31, 2021		December 31, 2020
Right-of-use assets, net	$	1,528	$	434

Current lease obligations	$	164	$	44
Non-current lease obligations	1,375		389
Total lease liabilities	$	1,539	$	433

Supplemental information related to leases was as follows:


	Three months ended March 31,
	2021		2020
Weighted-average remaining lease term — operating leases (years)	6.7		1.8
Weighted-average discount rate — operating leases	4.6	%	7.6	%

Future minimum operating lease base rent payments are approximately as follows (in thousands):


For the Years Ending December 31,	Amount
Remainder of 2021	$	163
2022	252
2023	261
2024	269
2025	277
Thereafter	578
Total	$	1,800
Less: present value adjustment	(261)
Present value of minimum lease payments	$	1,539

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6.Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities are as follows (in thousands):


	March 31, 2021		December 31, 2020
Research and development	$	454	$	512
Clinical	115		117
Professional fees	1,259		405
Employee-related	336		963
Severance-related (1)	405		712
Other	134		232
Total accrued expenses and other current liabilities	$	2,703	$	2,941

_______________________

(1) In June 2020, the Company communicated notice to 5 employees of the termination of their employment as a result of the discontinuation of the Company's OCU300 product candidate for the treatment of symptoms associated with ocular graft-versus-host disease ("oGVHD"). This reduction represented one-third of the Company’s workforce at the time of communication. All terminations were “without cause” and each employee received termination benefits upon departure. The termination dates varied for each employee and ranged from June 30, 2020 to December 31, 2020. During the three months ended March 31, ~~2020. Ocugen has not terminated~~2021, the ~~Asset Purchase Agreement as~~Company made severance payments of ~~March 31, 2020.~~$0.3 million. The Company expects to pay severance benefits of $0.4 million throughout the remainder of 2021.

7.Debt

The ~~NeoCart~~^® ~~asset qualified as held for sale as~~following table provides a summary of the ~~date~~carrying values for the components of ~~the reverse asset acquisition and is carried at its original fair value less cost to sell~~debt as reflected on the condensed consolidated balance sheets (in thousands):


	March 31, 2021		December 31, 2020
PPP Note	$	421	$	421
EB-5 Loan Agreement	1,655		1,636
Total carrying value of debt, net	$	2,076	$	2,057

PPP Note

On April 30, 2020, the Company was granted a loan from Silicon Valley Bank ("SVB"), in the aggregate amount of $0.4 million, pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief and Economic Security Act of 2020 (the “CARES Act”). On June 5, 2020, the PPP Flexibility Act of 2020 (the "PPPFA") was signed into law amending the original terms of the PPP. Among other things, the PPPFA extended the deferral period for monthly principal and interest payments from six months to either (i) the date the Small Business Administration ("SBA") compensates the lender for any forgiven amounts or (ii) 10 months after the end of the borrower's loan forgiveness covered period. The PPPFA also extended the covered period for qualifying expenses from eight weeks to the earlier of 24 weeks or December 31, 2020. Certain amounts of the loan may be forgiven if they are used for qualifying expenses as described by the CARES Act.

The loan was in the form of a promissory note dated April 30, 2020 in favor of SVB (the "PPP Note"). The PPP Note matures on April 30, 2022 and bears interest at a rate of 1.0% per annum. Principal and interest payments are payable monthly commencing on either (i) the date the SBA compensates SVB for forgiven amounts or (ii) 10 months after the end of the Company's covered period, which ended in October 2020. If the PPP Note is fully forgiven, the Company will not be responsible for any payments. The Company did not provide any collateral or guarantees for the loan, nor did the Company pay any facility charge to obtain the loan. The PPP Note provides for customary events of default, including, among others, failure to make payment, bankruptcy, breaches of representations, and material adverse events.

As of March 31, ~~2020~~2021 and December 31, ~~2019. The NeoCart~~^® ~~asset held for sale~~2020, the carrying value of the PPP Note was ~~valued at the acquisition date based on a quoted price~~$0.4 million.

Table of $7.0 million, which is an observable Level 2 fair value input. Any subsequent increases in fair value, if applicable, are not recognized beyond the initial value at the time the asset was classified as held for sale.Contents

~~4. Net Loss Per Share of Common Stock~~

~~The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019:~~

Three months ended March 31,
2020 2019
Net loss—basic and diluted $ (3,943,819) $ (6,312,606)
Shares used in calculating net loss per common share—basic and diluted 52,627,228 4,960,552
Net loss per common share—basic and diluted $ (0.07) $ (1.27)

~~The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding, as their inclusion would have been antidilutive:~~

Three months ended March 31,
2020 2019
Options to purchase common stock 2,496,771 524,789
Warrants 870,020 870,020
Series A Warrants 8,771,928 —
Series B Warrants 1,000 —
Series C Warrants 1,000 —
Total 12,140,719 1,394,809

5.~~Accrued Expenses~~

~~Accrued Expenses are as follows:~~

March 31,
2020 December 31,
2019
Accrued expenses:
Research and development $ 120,092 $ 271,322
Clinical 406,213 421,788
Professional fees 486,395 917,568
Employee-related 369,499 624,420
Other 1,459 34,947
Total accrued expenses $ 1,383,658 $ 2,270,045

6.~~Debt~~

EB-5 Loan Agreement

In September 2016, pursuant to the U.S. government’s Immigrant Investor Program, commonly known as the EB-5 program (the “EB-5 Program”), the Company entered into an arrangement (the “EB-5 Loan Agreement”) to borrow up to $10.0 million

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from EB5 Life Sciences, L.P. ~~(the “Lender”~~(“EB-5 Life Sciences”) in $0.5 million increments. Borrowing may be limited by the amount of funds raised by the ~~Lender~~EB-5 Life Sciences and are subject to certain job creation requirements by the Company. Borrowings are at a fixed interest rate of 4.0% per annum and are to be utilized in the clinical development, manufacturing, and commercialization of the Company’s ~~products~~product candidates and for the general working capital needs of the Company. Outstanding borrowings pursuant to the EB-5 ~~Program,~~Loan Agreement, including accrued interest, become due upon the seventh anniversary of the final disbursement. Amounts repaid cannot be re-borrowed. The EB-5 ~~Program~~Loan Agreement borrowings are secured by substantially all assets of the Company, except for any patents, patent applications, pending patents, patent ~~license,~~licenses, patent ~~sublicense,~~sublicenses, trademarks, and other intellectual property rights.

Under the terms and conditions of the EB-5 Loan Agreement, the Company borrowed $1.0 million in 2016 and an additional $0.5 million onin March ~~26,~~ 2020. Issuance costs were recognized as a reduction to the loan balance and are amortized to interest expense over the term of the loan.

March 31,
2020 December 31,
2019
Principal outstanding $ 1,500,000 $ 1,000,000
Plus: accrued interest 138,222 127,777
Less: unamortized debt issuance costs (57,662) (55,654)
Carrying value of debt $ 1,580,560 $ 1,072,123

~~Convertible Notes~~

~~During~~The carrying values of the ~~years ended~~EB-5 Loan Agreement borrowings as of March 31, 2021 and December 31, ~~2019~~2020 are summarized below (in thousands):


	March 31, 2021		December 31, 2020
Principal outstanding	$	1,500	$	1,500
Plus: accrued interest	196		181
Less: unamortized debt issuance costs	(41)		(45)
Carrying value	$	1,655	$	1,636

8.Equity

COVAXIN Preferred Stock Purchase Agreement

On March 1, 2021, the Company entered into a Preferred Stock Purchase Agreement, pursuant to which the Company agreed to issue and ~~2018,~~sell 0.1 million shares of the Company’s Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Convertible Preferred Stock”), at a price per share equal to $109.60, to Bharat Biotech. On March 18, 2021, the Company issued the Series B Convertible Preferred Stock as an advance payment for the supply of COVAXIN to be provided by Bharat Biotech pursuant to a supply agreement expected to be entered into with respect to the parties' Covaxin Agreement (the "Supply Agreement").

Each share of Series B Convertible Preferred Stock is convertible, ~~notes~~at the option of Bharat Biotech, into 10 shares of the Company’s common stock (the ~~“Notes”~~"Conversion Ratio") only after (i) the Company’s receipt of stockholder approval to ~~new~~increase the number of authorized shares of common stock under its Sixth Amended and ~~existing stockholders~~Restated Certificate of Incorporation and (ii) the Company’s receipt of shipments by Bharat Biotech of the first 10.0 million doses of COVAXIN manufactured by Bharat Biotech pursuant to the Supply Agreement, and further on the terms and subject to the conditions set forth in the ~~Company, including Notes~~Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (the "Certificate of Designation"). The conversion rate of the Series B Convertible Preferred Stock is subject to adjustment in the ~~aggregate principal amount~~event of ~~$3.5 million~~a stock dividend, stock split, reclassification, or similar event with respect to ~~members~~the Company’s common stock. Subsequent to March 31, 2021, the Company's stockholders approved an increase in the number of the ~~Board~~Company's authorized shares of ~~Directors. As of December 31, 2019, all Notes had been converted and were 0 longer outstanding.~~common stock. See Note 12 for additional information.

~~At issuance, the following amounts were recorded:~~

Note Issuance Date Note
Principal
Amount Fair Value of Embedded Derivatives Debt
Issuance
Costs Carrying
Value upon Issuance
January 2018 $ 5,000,000 $ (2,657,711) $ (35,969) $ 2,306,320
June 2018 1,000,000 (724,216) (3,000) 272,784
November 2018 1,150,400 (21,127) (50,646) 1,078,627
December 2018 150,000 (2,857) (14,310) 132,833
January 2019 450,000 (182,882) (29,358) 237,760
February 2019 1,000,000 (302,379) (55,875) 641,746
Total $ 8,750,400 $ (3,891,172) $ (189,158) $ 4,670,070

~~All Notes accrued interest at a rate of 5% per annum and had scheduled maturity dates~~Bharat Biotech is entitled to receive dividends on the ~~eighteen~~ ~~month anniversary~~Series B Convertible Preferred Stock equal (on an as-converted to common stock basis) to and in the same form as dividends actually paid on shares of common stock, when and if such dividends are paid. Except as provided by law and certain protective provisions set forth in the Certificate of Designation, the Series B Convertible Preferred Stock has no voting rights. Upon a liquidation or dissolution of the ~~date~~Company, holders of Series B Convertible Preferred Stock would be entitled to receive the same amount that a holder of common stock would receive if the Series B Convertible Preferred Stock were fully converted to common stock.

The Company accounted for the issuance of the ~~Notes (the “Maturity Date”). If prior to~~Series B Convertible Preferred Stock in accordance with ASC 718 and recorded the ~~Maturity Date, there was~~fair value of $5.0 million within equity during the three months ended March 31, 2021, with a ~~consummation~~corresponding short-term asset for the advanced payment for the doses of the sale of all or substantially all of the assets of the Company, change in control or event of default, the Notes would become due and payable at an amount equal to 1.5 times the principal amount of the Notes together with all accrued interest (the “Change in Control Feature”).

If the Company received equity financing from the issuance of stock of the Company from an investor or group of investors in a transaction or series of related transactions above a certain amount of gross proceeds, the principal amount and all interest accrued but not paid through the closing date of the qualified equity financing was to automatically convert into the same class of equity securities as those issued in the qualified equity financing ("conversion feature"). The price per share varied among the Notes ranging from a 0% to 30% discount to the lowest price per share being paid by investors in the qualified equity financing.

COVAXIN. The Company ~~bifurcated~~utilized the ~~conversion feature for the January 2018, June 2018, January 2019, and February 2019 notes and classified it as a derivative liability because the conversion feature did not have a fixed conversion~~traded common stock price, and conversion would be settled in a variable number of shares of common stock. There was no bifurcated conversion feature for the November 2018 and December 2018 notes as there is no discount to the lowest equity price triggering conversion. The Company also bifurcated

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adjusted by the ~~Change in Control Feature~~Conversion Ratio, to value the Series B Convertible Preferred Stock and the Finnerty model to estimate a 15% discount rate for ~~all~~the lack of marketability of the ~~Notes because it was determined to be a redemption feature not clearly and closely related to the debt host.~~

instrument. The ~~fair value of both of the embedded features was accounted for as a derivative liability and was recorded as a discount on the Notes. Inputs used in~~ valuation ~~were unobservable and therefore considered~~incorporates Level 3 inputs in the fair value ~~hierarchy. The debt discount is accreted into interest expense over~~hierarchy, including the ~~expected~~estimated time until ~~conversion~~the instrument's liquidity and estimated volatility of the ~~Notes.~~Company's common stock as of the grant date.

Registered Direct Offering

On February 7, 2021, the Company entered into a Securities Purchase Agreement pursuant to which the Company agreed to issue and sell in a registered direct offering, 3.0 million shares of the Company's common stock at an offering price of $7.65 per share (the "February 2021 Registered Direct Offering"). The ~~accretion amounted to $0.5~~closing of the February 2021 Registered Direct Offering occurred on February 10, 2021 and the Company received net proceeds of $21.2 million ~~for~~after deducting equity issuance costs of $1.7 million.

At-the-Market Offering

During the three months ended March 31, ~~2019. There was no accretion during~~2021, the ~~three months ended March 31, 2020 as all Notes had been converted and were 0 longer outstanding as of December 31, 2019.~~

The fair value of the embedded features was classified as a liability in the Company’s condensed consolidated balance sheets at issuance, with subsequent changes in fair value recorded on the Company’s condensed consolidated statements of operations and comprehensive loss as a change in fair value of derivative liabilities.

~~On April 5, 2019, OpCo entered into a Stock Subscription Agreement with existing investors for the sale of 0.1~~Company sold 1.0 million shares of the Company's common stock ~~for $1.0~~in an at-the-market offering (“ATM”) commenced in August 2020 (the "August 2020 ATM"). The Company received net proceeds of $4.8 million, ~~or $12.41 per share including~~after deducting equity issuance costs of $0.1 million. The offering was made pursuant to the ~~sale~~Company's effective "shelf" registration statement on Form S-3 filed with the SEC on March 27, 2020, the base prospectus contained therein dated May 5, 2020, and the prospectus supplement related to the offering dated August 17, 2020. As of ~~40,286~~March 31, 2021, the Company had the remaining capacity to raise $3.3 million by issuing shares of the Company's common stock ~~for $0.5 million to a member of~~under the Board of Directors. This capital raise triggered the conversion features on the convertible debt described above. The Notes were modified to change the discount percentage from the 0% discount per the terms of the November 2018 and December 2018 Notes and the 15% discount per the terms of the January 2019 and February 2019 Notes to 30% at the time of conversion. The Company issued 1.1 million shares of common stock at $8.69 per share on the date of conversion to extinguish the debt, which resulted in a loss of $0.3 million. This non-cash conversion also resulted in an increase of $13.0 million in additional paid-in capital, which was based on the principal balance outstanding and the unpaid interest upon conversion.

~~Subsequent to March 31, 2020, the Company issued promissory notes~~prospectus supplement in connection with the ~~Warrant Exchange (as defined in Note 10). See Note 10 for additional information.~~August 2020 ATM.

OpCo Warrants

Prior to 2018, OpCo issued warrants to purchase the Company's common stock (the "OpCo Warrants") to investors of the Company pursuant to a stockholders' agreement and to 2 employees of the Company pursuant to their respective employment agreements. As of March 31, 2021 and December 31, 2020, 0.9 million OpCo Warrants were outstanding and exercisable and had a weighted average exercise price of $5.67 per share. The OpCo Warrants expire between 2026 and 2027.

7.9. Stock-based Compensation

Stock-based compensation expense for options granted is reflected in the condensed consolidated statements of operations and comprehensive loss as ~~follows:~~follows (in thousands):


		Three months ended March 31,							Three months ended March 31,
		2020		2019			2021		2020
General and administrative	General and administrative	$	103,477	$	271,268	General and administrative	$	590	$	103
Research and development	Research and development	119,036		143,934		Research and development	243		119
Total	Total	$	222,513	$	415,202	Total	$	833	$	222

As of March 31, ~~2020,~~2021, the Company had ~~$1.4~~$9.3 million of unrecognized compensation expense related to options outstanding under its equity plans. This expense is expected to be recognized over a weighted average period of ~~2.1~~2.6 years as of March 31, ~~2020~~2021.

Equity Plans

The Company maintains 2 equity compensation plans, the 2014 Ocugen OpCo, Inc. Stock Option Plan (the “2014 Plan”) and the Ocugen, Inc. 2019 Equity Incentive Plan (the “2019 Plan”, collectively with the 2014 Plan, the "Plans")~~, which replaced the Histogenics Corporation 2013 Equity Incentive Plan (the "2013 Plan")~~.

In 2019, Ocugen’s stockholders approved the adoption of the 2019 Plan and the 2013 Plan was frozen. No additional awards have been or will be made under the 2013 Plan and any remaining authorized shares under the 2013 Plan were recycled into the 2019 Plan. On the first business day of each fiscal year, pursuant to the "Evergreen" provision of the 2019 Plan, the aggregate number of shares that may be issued under the 2019 Plan will automatically increase by a number equal to the lesser of 4% of the total number of shares of ~~Company~~the Company's common stock outstanding on December 31^st of the prior year, or a number of shares of ~~Company~~the Company's common stock determined by the ~~Board.~~Board of Directors.

As of March 31, ~~2020,~~2021, the 2014 Plan provides for the granting of up to ~~0.8~~0.4 million equity awards in respect to ~~Ocugen's~~the Company's common stock. As of March 31, ~~2020,~~2021, the 2019 Plan provides for the granting of up to ~~4.2~~1.3 million equity awards in respect ofto

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~~Ocugen's~~the Company's common stock, inclusive of ~~equity awards that were previously available for issuance under the 2013 Plan and~~ the additional shares authorized for issuance pursuant to the 2019 Plan's "Evergreen" provision on January 1, ~~2020.~~2021.

As of March 31, ~~2020,~~2021, an aggregate of ~~0.6~~0.4 million and ~~1.9~~8.8 million shares of ~~Company~~the Company's common stock were issuable upon the exercise of outstanding stock options under the 2014 Plan and 2019 Plan, respectively.

Options to Purchase Common Stock

The following table summarizes the stock option activity under the Plans:

Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value
Options outstanding at December 31, 2019 731,189 $ 4.59 8.0 $ 24,028
Granted 1,766,381 $ 0.51
Forfeited (799) $ 7.56
Options outstanding at March 31, 2020 2,496,771 $ 1.70 9.2 $ 23
Options exercisable at March 31, 2020 416,464 $ 5.00 6.7 $ —


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Options outstanding at December 31, 2020	4,224,433	$	0.84	8.9	$	5,496
Granted	5,192,550	$	2.10		$	—
Exercised	(157,468)	$	1.11		$	980
Forfeited	(23,970)	$	13.52		$	—
Options outstanding at March 31, 2021	9,235,545	$	1.51	9.3	$	49,598
Options exercisable at March 31, 2021	860,287	$	1.88	7.7	$	4,477

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2021 and 2020 were $1.73 and $0.42, respectively. The total fair value of stock options vested during the three months ended March 31, 2021 and 2020 was ~~$0.42 per share.~~$0.3 million and $0.1 million, respectively.

8.~~Commitments~~

~~Operating Leases~~

~~The Company has commitments under operating leases for certain facilities used in its operations. The Company’s leases have initial lease terms ranging from~~ ~~one~~ ~~to five years. Certain lease agreements contain provisions for future rent increases.~~10. Net Loss Per Share of Common Stock

The ~~components~~following table sets forth the computation of ~~lease expense~~basic and diluted earnings per share for the three months ended March 31, 2021 and 2020 (in thousands, except share and per share amounts):


	Three months ended March 31,
	2021		2020
Net loss — basic and diluted	$	(7,077)	$	(3,944)


Shares used in calculating net loss per common share — basic and diluted	186,298,122		52,627,228
Net loss per common share — basic and diluted	$	(0.04)	$	(0.07)

The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding, as their inclusion would have been antidilutive:


	Three months ended March 31,
	2021	2020
Options to purchase common stock	9,235,545	2,496,771
RSUs	2,190	0
Warrants	870,017	9,643,945
Series A Convertible Preferred Stock (as converted to common stock)	3,115	3,115
Series B Convertible Preferred Stock (as converted to common stock)	547,450	0
Total	10,658,317	12,143,831

Total warrants excluded from the computation of diluted weighted average shares outstanding for the three months ended March 31, 2021 is comprised of 0.9 million OpCo Warrants. Total warrants excluded from the computation of diluted weighted average shares outstanding for the three months ended March 31, 2020 is comprised of 0.9 million OpCo Warrants as well as an aggregate of 8.8 million warrants issued in October 2019 under a securities purchase agreement with certain accredited investors (the "SPA Warrants"). No SPA Warrants were outstanding as ~~follows:~~

Three months ended March 31,
2020 2019
Operating lease cost $ 47,696 $ 73,273
Variable lease cost 21,169 15,848
Total lease cost $ 68,865 $ 89,121

~~Supplemental balance sheet information related to leases was as follows:~~

March 31, 2020 December 31, 2019
Right-of-use assets, net $ 302,990 $ 344,574
Current lease obligations $ 176,616 $ 172,310
Non-current lease obligations 117,142 163,198
Total lease liabilities $ 293,758 $ 335,508

~~Supplemental information related to leases was as follows:~~

Three months ended March 31,
2020 2019
Weighted-average remaining lease terms—operating leases (years) 1.8 2.3
Weighted-average discount rate—operating leases 7.6 % 7.6 %
of March 31, 2021 and December 31, 2020.

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~~Future minimum operating~~11.Commitments and Contingencies-

Commitments

The Company has commitments under certain license agreements, lease agreements, debt agreements, and separation agreements. Commitments under certain license agreements primarily include annual payments, payments upon the achievement of certain milestones, and royalty payments based on net sales of licensed products. Commitments under the Company's licensing agreements are more fully described within Note 3 and within the Company's 2020 Annual Report. Commitments under lease agreements are future minimum lease payments for ~~all leases, exclusive~~operating leases. See Note 5 for additional information about commitments under lease agreements. Commitments under debt agreements are payments for any amount of ~~taxes~~principal and ~~other carrying charges,~~accrued interest under the PPP Note that is determined to be not forgiven by the SBA as well as the future payment of principal and accrued interest under the EB-5 Loan Agreement. See Note 7 for additional information about commitments under debt agreements. Commitments under separation agreements are ~~approximately~~severance payments to be paid throughout the remainder of 2021 as ~~follows:~~a result of the reduction in force in connection with the Company's discontinuation of its OCU300 product candidate. See Note 6 for additional information about commitments under separation agreements.

For the Years Ending December 31, Amount
Remainder of 2020 $ 144,169
2021 160,909
2022 11,354
Total $ 316,432
Less: present value adjustment (22,674)
Present value of minimum lease payments $ 293,758
Contingencies

~~Financing Leases~~

~~In June 2018,~~From time to time, the Company ~~leased specialized research equipment under a lease classified as a financing lease. The leased equipment~~ is ~~included~~subject to claims in ~~property and equipment, net and is amortized on a straight-line basis over five years. Financing lease liabilities are included~~legal proceedings arising in ~~other liabilities on~~ the ~~Company's condensed consolidated balance sheets. The interest rate related to the lease obligation is 7.6% and the maturity date is July 2021.~~

~~Future minimum lease payments for all financing leases, exclusive~~normal course of ~~taxes and other carrying charges, are approximately as follows:~~

For the Years Ending December 31, Amount
Remainder of 2020 $ 23,856
2021 3,977
Total $ 27,833
Less: present value adjustment (1,278)
Present value of minimum lease payments $ 26,555

its business. The Company does not believe that it is currently party to any pending legal actions that could reasonably be expected to have ~~any leases that have not yet commenced which are significant.~~a material adverse effect on the business, financial condition, results of operations, or cash flows.

9.~~Warrants~~

On September 27, 2019, Ocugen completed the Merger with OpCo. Immediately prior to the Merger, Ocugen and OpCo completed a previously announced private placement transaction with certain Investors pursuant to the Financing SPA, whereby, among other things, the Company agreed to issue Series A Warrants, Series B Warrants, and Series C Warrants.

The Pre-Merger Financing Warrants include a blocker that restricts the exercise of the Pre-Merger Financing Warrants if, as a result of such exercise, the holder, together with its affiliates would beneficially own in excess of 4.99% or 9.99% of the outstanding common stock, including the common shares issuable upon such exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Merger Financing Warrants.

If Ocugen fails to issue to a holder of the Pre-Merger Financing Warrants the number of shares of common stock to which such holder is entitled upon such holder’s exercise of the such warrants, then Ocugen shall be obligated to pay the holder on each day while such failure is continuing an amount equal to 2.0% of the market value of the undelivered shares determined using any trading price of the common stock selected by the holder as in effect at any time during the period from delivery of the exercise notice until the applicable share delivery date, and if the holder purchases shares of common stock in connection with such failure, then Ocugen must, at the holder’s discretion, reimburse the holder for the cost of such shares or deliver the owed shares and reimburse the holder for the difference between the price such holder paid for such shares and the closing market price for shares of common stock on the date of exercise.

On November 5, 2019, the Company entered into an agreement with each Investor that amends the terms of each of the Pre-Merger Financing Warrants held by each such Investor (collectively, the “Warrant Amendments”). The terms of the Pre-Merger Financing Warrants and the Warrant Amendments are discussed below. Subsequent to March 31, 2020, the Pre-Merger Financing Warrants were exchanged pursuant to an Amendment and Exchange Agreement. Following the consummation of the

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~~transactions described in Note 10, there were no Pre-Merger Financing Warrants outstanding. See Note 10 for additional information.~~

~~Series A Warrants~~

The Series A Warrants had an initial exercise price per share of $7.13, were exercisable upon issuance and have a term of 60 months from the date of issuance. The Series A Warrants are exercisable for up to 8.8 million shares of Ocugen common stock.

The Series A Warrants had an anti-dilution adjustment whereby if Ocugen issues or sells, enters into a definitive, binding agreement pursuant to which Ocugen is required to issue or sell or is deemed, pursuant to the provisions of the Series A Warrants, to have issued or sold, any common stock for a price per share lower than the exercise price then in effect (a “Dilutive Issuance”), subject to certain limited exceptions, then (i) the exercise price of the Series A Warrants shall be reduced to such lower price per share and (ii) the number of shares issuable upon exercise of the Series A Warrants shall be increased to the number of shares of common stock determined by multiplying (a) the exercise price in effect immediately prior to such Dilutive Issuance by (b) the number of shares of common stock issuable upon exercise of the Series A Warrants immediately prior to such Dilutive Issuance (without giving effect to any limitation on exercise contained therein), and dividing the product thereof by the exercise price resulting from such Dilutive Issuance.

Each Series A Warrant was amended pursuant to the Warrant Amendments such that an equity financing involving a research or non-profit foundation or organization qualified under Section 501(c) of the Internal Revenue Code of 1986, as amended, in an amount of gross proceeds not to exceed $10.0 million and closing on or prior to May 31, 2020, will be excluded from the anti-dilution adjustment, as set forth in the Series A Warrant. All of the Series A Warrants were outstanding and exercisable as of March 31, 2020 and December 31, 2019.

~~Series B Warrants~~

The Series B Warrants had an exercise price of $0.01, were exercisable after the completion of a 10 trading-day period following the effectiveness of a registration statement covering the resale of common stock into which such warrants were exercisable and were to expire on the date on which the Series B Warrants have been exercised in full (without giving effect to any limitation on exercise contained therein) and no shares remain issuable thereunder. The Series B Warrants were initially exercisable by a holder for 8.0 million shares of common stock.

Additionally, each Series B Warrant included a Reset Period pursuant to which the number of shares issuable upon exercise of the Series B Warrants shall be increased during certain Reset Periods (as defined in the Series B Warrants) pursuant to a formula based on the greater of (i) 80% of the arithmetic average of the two lowest dollar volume-weighted average prices of a share of Ocugen common stock on the NASDAQ Capital Market ("Nasdaq") during the applicable Reset Period immediately preceding the applicable Reset Date to date and (ii) $1.00 (the “Reset Price”). The Reset Period commenced on November 20, 2019. As the dollar volume-weighted average prices of Ocugen’s common stock on Nasdaq was under $1.00 for the first two trading days of the Reset Period, the Investors elected to advance the end of the Reset Period to November 21, 2019 and the number of shares issuable upon exercise of the Series B Warrants was increased based on a Reset Price of $1.00. This reset resulted in an aggregate of 12.6 million additional shares of common stock becoming issuable upon exercise of the Series B Warrants. There were 1,000 Series B Warrants outstanding at March 31, 2020 and December 31, 2019.

~~Series C Warrants~~

The Series C Warrants were exercisable upon issuance for up to 50.0 million shares of common stock at an initial exercise price of $7.13 per share. Each of the Series C Warrants was amended pursuant to the Warrant Amendments to permit the Investors, in lieu of making any cash payment otherwise contemplated to be made to the Company upon the exercise of the Series C Warrant, to elect instead to receive upon such exercise up to 20.0 million shares of common stock. Prior to the Warrant Amendments, the Series C Warrants had permitted the exercise without any cash payment of up to 50.0 million shares of common stock in the event that the volume weighted-average price of the common stock on Nasdaq was less than or equal to $1.20 per share on any five trading days following the issuance of the Series C Warrants. There were 1,000 Series C Warrants outstanding at March 31, 2020 and December 31, 2019.

~~OpCo Warrants~~

Prior to 2018, OpCo issued warrants to investors of the Company pursuant to a stockholders' agreement and to two employees of the Company pursuant to their respective employment agreements. As of March 31, 2020 and December 31, 2019,

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~~0.9 million warrants to purchase common stock were outstanding and exercisable and had a weighted average exercise price of $5.67 per share. The warrants expire between 2025 and 2027.~~

~~10.~~12. Subsequent Events

~~Warrant Exchange~~Promissory Note

On April 22, 2020, the Company effected a private placement of common stock pursuant to Regulation D under the Securities Act of 1933 at a price per share of $0.395 (the "Private Placement"). The Private Placement constituted a Dilutive Issuance (as defined within Note 9) and resulted in adjustments to the number of issuable Series A Warrants and the exercise price under the Series A Warrants.

Contemporaneously with the Private Placement, the Company and OpCo entered into an Amendment and Exchange Agreement (each an "Exchange Agreement" and collectively, the "Exchange Agreements") with the Investors (as defined within Note 3). Pursuant to the Exchange Agreements, the Company, OpCo and the Investors agreed, among other things, that after giving effect to the Dilutive Issuance and an adjustment to the number of common stock issuable upon the exercise of the Series A Warrants, the outstanding Series A Warrants became exercisable for an aggregate of 48.1 million shares of common stock at an exercise price of $0.395 per share. The Investors exchanged the Series A Warrants for (i) an aggregate of 21.9 million shares of common stock and (ii) the April 2020 Notes as defined below (collectively the "Warrant Exchange"). Concurrently with the Warrant Exchange, an investor holding the remaining Series B Warrants and Series C Warrants exercised such warrants in full.

~~In connection with the Warrant Exchange, on April 22, 2020,~~13, 2021, the Company issued a promissory ~~notes (the "April 2020 Notes") with an aggregate~~note in the principal amount of ~~$5.6~~$0.8 million to ~~existing investors.~~a company (the “Promissory Note”). The Promissory Note bears interest at a rate per annum of 5%. The outstanding principal balance of the Promissory Note plus any accrued and unpaid interest thereon is payable in full on April ~~2020 Notes have a maturity date of April 21, 2021 and do not bear interest.~~13, 2022. The ~~Company~~Promissory Note may ~~prepay the April 2020 Notes~~be prepaid in whole or in part at any time, together with any accrued and unpaid interest, without premium, penalty, or premium. In the event that the Company consummates a financing transaction that generates cash to the Company, the Company is required to use 20% of the net proceeds of such transaction to redeem the outstanding amount under each April 2020discount. The Promissory Note ~~if the transaction occurs on or prior to August 22, 2020,~~contains customary covenants and ~~30% of the net proceeds if that transaction occurs after August 22, 2020.~~

~~PPP Loan~~

On April 30, 2020, the Company was granted a loan (the “Loan”) from Silicon Valley Bank (the "Lender"), in the aggregate amount of $0.4 million, pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief and Economic Security Act of 2020 (the “CARES Act”).

The Loan was in the form of a promissory note dated April 30, 2020 in favor of the Lender (the "Note"). The Note matures on April 30, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 30, 2020. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The Company did not provide any collateral or guarantees for the Loan, nor did the Company pay any facility charge to obtain the Loan. The Note provides for customary events of default, including, among others, failure to make payment, ~~bankruptcy, breaches~~breach of ~~representations~~agreement, and ~~material adverse events. Under~~bankruptcy.

Increase in Authorized Shares of Common Stock

On April 14, 2021, the ~~terms~~Company's stockholders approved an increase in the number of the ~~PPP, certain amounts~~Company's authorized shares of common stock from 200.0 million to 295.0 million. Following receipt of the ~~Loan may be forgiven if they are used for qualifying expenses as described~~stockholder approval, the Company filed a Certificate of Amendment to the Company's Sixth Amended and Restated Certificate of Incorporation with the State of Delaware to effect the increase in authorized shares.

Registered Direct Offering

On April 23, 2021, the ~~CARES Act.~~

Company entered into a securities purchase agreement with healthcare-focused institutional investors pursuant to which the Company agreed to issue and sell in a registered direct offering (the "April 2021 Registered Direct Offering") an aggregate of 10.0 million shares of the Company's common stock at an offering price of $10.00 per share. The closing of the April 2021 Registered Direct Offering occurred on April 27, 2021 and the Company received net proceeds of $93.4 million after deducting equity issuance costs of $6.6 million.

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Item 2. 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, ~~2019,~~2020, included in our 2020 Annual ~~Report on Form 10-K filed with the SEC on March 27, 2020 (the "2019 Annual Report").~~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. 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 2020 Annual Report and the "Risk Factors" and “Disclosure Regarding Forward-Looking Statements” ~~section~~sections of 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 ~~clinical-stage~~ biopharmaceutical company focused on ~~discovering,~~ developing ~~and commercializing transformative~~gene therapies to ~~treat the whole eye.~~cure blindness diseases and developing a vaccine to save lives from COVID-19.

~~We are focused on the development of three waves of technological innovations that target the front and back of the eye:~~

~~Potential therapy that targets the front of the eye:~~Our cutting-edge technology pipeline includes:

•~~Small Molecule Phase 3 Rare Disease Asset~~COVID-19 Vaccine —~~Our OCU300 product~~ COVAXIN is a whole-virion inactivated COVID-19 vaccine candidate isbeing developed to prevent COVID-19 infection in ~~Phase 3 clinical development~~humans. We are co-developing COVAXIN with Bharat Biotech for the ~~treatment of symptoms associated with ocular graft-versus-host disease (“oGVHD”).~~U.S. market.

~~Potential therapies that target the back of the eye:~~

•Modifier Gene Therapy Platform—Based on ~~nuclear hormone receptors ("NHRs"),~~NHRs, we believe our gene therapy platform has the potential to address many retinal diseases, including ~~retinitis pigmentosa with one product.~~RP, LCA, and dry AMD.

•Novel Biologic Therapy for Retinal Diseases—We are developing OCU200, ~~which is being developed~~a novel biologic product candidate, to treat ~~diabetic macular edema (“DME”), diabetic retinopathy (“DR”)~~DME, DR, and wet ~~age-related macular degeneration (“AMD”).~~AMD.

COVID-19 Vaccine

In February 2021, we entered into the Covaxin Agreement with Bharat Biotech, pursuant to which we obtained an exclusive right and license under certain of Bharat Biotech's intellectual property rights, with the right to grant sublicenses to develop, manufacture, and commercialize COVAXIN for the prevention of COVID-19 in humans in the Ocugen Covaxin Territory. COVAXIN is a whole-virion inactivated COVID-19 vaccine candidate and is formulated with the inactivated SARS-CoV-2 virus, an antigen, and an adjuvant. COVAXIN requires a two-dose vaccination regimen given 28 days apart and is stored in standard vaccine storage conditions (2-8°C).

COVAXIN has been granted approval for emergency use in India and millions have been dosed to date. The Phase 1 and Phase 2 clinical trials conducted in India reported strong IgG responses against the spike protein, RBD, and the nucleocapsid protein of the SARS-CoV-2 virus, along with strong cellular responses. Strong cellular responses are necessary for memory and long-term durability of vaccines. Both the Phase 1 and Phase 2 clinical trials were published in the Lancet. Bharat Biotech is currently conducting a Phase 3 clinical trial in India. Enrollment in the Phase 3 clinical trial is complete. In April 2021, COVAXIN demonstrated positive results in the second interim analysis of the Phase 3 clinical trial showing a vaccine efficacy in mild, moderate, and severe COVID-19 disease of 78%, efficacy against severe COVID-19 disease alone of 100%, and efficacy against asymptomatic COVID-19 infection of 70%. The 78% efficacy result represents a point estimate of vaccine efficacy with a 95% confidence interval of 61% to 88% against mild, moderate, and severe COVID-19 disease. In an in vitro study conducted by the ICMR-National Institute of Virology, COVAXIN demonstrated potential effectiveness against the Brazilian variant of SARS-CoV-2, B.1.1.28.2, which contains the E484K mutation found in New York. An additional in vitro study conducted by the ICMR-National Institute of Virology suggested that COVAXIN was effective against the U.K. variant, B.1.1.7, as well as the Indian double mutant variant, B.1.617. These studies suggest that COVAXIN vaccination may be effective against infection from multiple SARS-CoV-2 variants.

We are ~~developing OCU300, which is~~currently evaluating the clinical and regulatory path for COVAXIN in the United States including obtaining EUA from the FDA and, eventually, BLA approval in the United States, as well as our commercialization strategy, if authorized or approved. We have initiated discussions with the FDA regarding the development of COVAXIN and EUA. Consistent with the FDA guidance document on EUA for vaccines to prevent COVID-19, we have submitted key information and data to date (including preclinical studies, CMC, and clinical studies) as a ~~small molecule therapeutic~~“Master File” for FDA review and input prior to a planned EUA submission. We are currently ~~in Phase 3 development~~waiting for additional data from Bharat Biotech from the ~~treatment of symptoms associated with oGVHD. In May 2020, we completed 100% of our planned enrollment of our~~ongoing Phase 3 clinical trial for ~~OCU300. OCU300 has received orphan drug designation ("ODD") from~~an

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EUA submission. Due to the ~~U.S. Food and Drug Administration ("FDA"), and~~crisis in India generated by the current surge in COVID-19 cases 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 patients receiving hematopoietic stem cell transplantation (“HSCT”) from donors, referred to as allogeneic HSCT, 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 in the United States to be approximately 63,000. OCU300experiencing, this process 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. OcuNanoE^™ ~~nanoemulsion was developed to decrease the drainage rate, prolong precorneal residence time and increase the drug concentration in the lacrimal gland, which is critical for tear film production.~~taking longer than anticipated. We are continuing to monitor the ~~first~~situation and ~~only company~~intend to ~~use nanoemulsion technology in~~file the ~~ophthalmology space.~~EUA submission as soon as practicable.

Modifier Gene Therapy Platform

We are ~~also~~ developing a breakthrough modifier gene therapy platform to generate therapies designed to fulfill unmet medical needs in the area of retinal diseases, including ~~inherited retinal diseases.~~IRDs and dry AMD. Our modifier gene therapy platform is based on NHRs, which have the potential to restore homeostasis, the basic biological processes in 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~~IRDs such as RP, a group of rare genetic disorders that involve a breakdown and loss of cells in the retina and can lead to visual impairment and blindness, affect over 2.0 million people worldwide. Over 150 gene mutations have been associated with RP and this number represents only 60% of the RP population. The remaining 40% of RP patients cannot be genetically diagnosed, making it difficult to develop individual treatments.

We believe that OCU400, our first product candidate being developed with our modifier gene therapy ~~candidate,~~platform, has the potential to be broadly effective in restoring retinal integrity and function across a range of genetically diverse IRDs, including RP and LCA. For example, we believe OCU400 has the potential to eliminate the need for developing more than 150 individual products and provide one treatment option for all RP patients. OCU400 has received ~~two~~four ODDs from the FDA ~~one~~ for the treatment of ~~nuclear receptor subfamily 2 group E member 3 ("~~certain disease genotypes: NR2E3~~") mutation-associated retinal diseases and the other for the treatment of centrosomal protein 290 ("~~, CEP290"), RHO, and PDE6ß mutation-associated inherited retinal ~~diseases.~~degenerations. We are planning to initiate atwo Phase 1/2a clinical ~~trial~~trials for OCU400 in the United States in the second half of 2021. OCU400 additionally received OMPD from the EC, based on the recommendation of the EMA, for RP and LCA in February 2021, which we believe further supports the potential broad spectrum application of OCU400 to treat many IRDs. We are currently evaluating options to commence OCU400 clinical trials in Europe in 2022. 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 AMD. This candidate is currently in preclinical development. We are planning to initiate a Phase 1/2a clinical trial for OCU410 in 2022.

~~Table of Contents~~

Novel Biologic Therapy for Retinal Diseases

We are ~~additionally in~~also conducting preclinical development for ~~a novel~~our biologic product candidate, OCU200. OCU200 is a novel fusion protein designed to treat DME, DR, and wet AMD. We had a pre-IND meeting with the FDA in November 2020 and received guidance on IND-enabling preclinical studies to support the Phase 1/2a study. We expect to initiate IND-enabling preclinical studies for OCU200 in 2021 and plan to initiate a Phase 1/2a clinical trial for OCU200 in 2022. ~~We plan to expand~~

Product Candidate for the ~~therapeutic applications~~Treatment of ~~OCU200 beyond DME, DR and wet AMD to potentially include macular edema following retinal vein occlusion and myopic choroidal neovascularization.~~oGVHD

We were developing ~~OCU310~~OCU300, a small molecule therapeutic for ~~patients~~the treatment of symptoms associated with ~~dry eye disease, which is also formulated using OcuNanoE~~^™~~. We have completed a~~oGVHD. The Phase 3 clinical trial for ~~OCU310 that~~OCU300 was ~~initiated~~discontinued in ~~September 2018. Although~~2020 based on results of a pre-planned interim sample size analysis conducted by an independent Data Monitoring Committee, which indicated the trial ~~showed that OCU310 is safe and well-tolerated, it did not~~was unlikely to meet its co-primary endpoints ~~for symptom and sign. We are no longer pursuing the development~~upon completion.

Impact of ~~this product candidate.~~COVID-19 on our Business

The COVID-19 pandemic continues to evolve and we are closely monitoring the ~~situation,~~situation. If the number of active cases of COVID-19 continues to be high in the United States and elsewhere, the pandemic may delay enrollment in our planned clinical trials. Among other things, continued spread of COVID-19 may result in limitations on global international travel, which may delay key trial activities including ~~its potential impact~~necessary interactions with regulators. We may be faced with limitations in employee resources that would otherwise be focused on ~~our clinical development plans and timelines. In response to the COVID-19 pandemic, we have implemented certain steps recommended by the FDA for~~ the conduct of clinical trials, ~~during~~including because of sickness of employees or their families or the ~~pandemic,~~desire of employees to avoid contact with large groups of people. Moreover, we may experience additional disruptions that could severely impact our business and development activities, including, ~~providing for virtual visits~~but not limited to, strain on our suppliers and ~~phone interviews,~~other third parties and the ~~self-administration of study medication and remote monitoring~~disruption of our ~~clinical trial subjects. We have additionally arranged for each patient's monthly~~ability to raise capital when needed on acceptable terms, if at all. Disruptions in our operations or supply chain, whether as a result of ~~study medication~~restricted travel, quarantine requirements or otherwise, could negatively impact our ability to ~~be delivered directly to patients. Each of~~proceed with our clinical ~~trial sites participating in~~trials, preclinical development, and other activities and delay our ~~OCU300 Phase 3~~ability to receive product approval and generate revenue. Impacts that may result from the COVID-19 pandemic remain highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical ~~trial~~trials, our preclinical development efforts, healthcare systems, or the global economy as a whole. However, these effects could have ~~suspended~~a material impact on our operations, and we will continue to monitor the ~~screening~~COVID-19 situation closely.

Table of ~~new patients into the trial. At this time, our timelines for delivery of top-line results from our Phase 3 trial remain unchanged.~~Contents

Financial Operations Overview

We have no products approved for commercial sale and have not generated ~~any~~significant revenue ~~from product sales.~~to date. We have never been profitable and have incurred operating losses in each year since inception. We incurred net losses of approximately ~~$3.9~~$7.1 million and ~~$6.3~~$3.9 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. As of March 31, ~~2020,~~2021, we had an accumulated deficit of ~~$55.4~~$80.4 million and a cash, cash equivalents, and restricted cash balance of ~~$3.3~~$44.9 million. ~~Substantially all~~

As 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,~~March 31, 2021, we ~~have~~ viewed our operations and ~~manage~~managed our business as one operating ~~segment.~~segment consistent with how our chief operating decision-maker, our Chief Executive Officer, makes decisions regarding resource allocation and assessing performance. As of March 31, ~~2020,~~2021, substantially all of our assets were located in the United States. Our headquarters and operations are located in Malvern, Pennsylvania.

~~Financial Operations Overview~~

Research and development expense

Research and development costs are expensed as incurred. These costs consist of internal and external ~~expenses.~~expenses, as well as depreciation on assets used within our research and development activities. Internal expenses include the cost of salaries, benefits, severance, and other related costs, including stock-based compensation, for personnel serving in our research and 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, contract manufacturers, 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 preclinical studies and 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.~~tasks. 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 condensed consolidated financial statements as prepaid or accrued research and development expense, as applicable. Our recording of costs for certain development activities requires us to use estimates. We believe our estimates and assumptions are reasonable under the ~~case~~current conditions; however, actual results may ~~be.~~differ from these estimates.

Research and development expenses account for a significant portion of our operating expenses. We plan to incur research and development expenses for the foreseeable future as we expect to continue the development of our product candidates. We anticipate that our research and development expenses will ~~increase~~be higher in 2021 as compared to prior periods ~~particularly~~ as we ~~complete our Phase 3 trial~~evaluate the regulatory and commercialization path for COVAXIN in the United States as well as conduct preclinical and clinical activities with respect to ~~OCU300~~our other product candidates. We are planning to initiate two Phase 1/2a clinical trials for OCU400 in the United States in the second half of 2021 and ~~prepare~~Phase 1/2a clinical trials for OCU410 and OCU200 in 2022. We are also currently evaluating options to commence ~~Phase 1/2a~~OCU400 clinical trials in Europe in 2022.

Our research and development expenses are not currently tracked on a program-by-program basis for indirect and overhead costs. We use our personnel and infrastructure resources across multiple research and development programs directed toward identifying, developing, and commercializing product candidates.

At this time, due to the inherently unpredictable nature of preclinical and clinical development as well as regulatory approval and commercialization, we are unable to estimate with any certainty the costs we will incur and the timelines we will require in our continued development and commercialization efforts. As a result of these uncertainties, successful development and completion of clinical trials as well as regulatory approval and commercialization are uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each 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 ~~OCU400, OCU410,~~each product candidate, the scientific and ~~OCU200.~~clinical success of each product candidate as well as ongoing assessments as to the commercial potential of each product candidate.

General and administrative expense

General and administrative expense consists primarily of personnel expenses, including salaries, benefits, severance, insurance, and stock-based compensation expense, for employees in executive, accounting, and other administrative functions. General and administrative expense also includes corporate facility costs, including allocated rent and utilities, ~~as well as~~insurance premiums, legal fees related to corporate matters, and fees for auditing, accounting, and other consulting services.

Table of Contents

We anticipate that our general and administrative expenses will ~~increase~~be higher in 2021 as compared to prior periods as a result of higher corporate infrastructure costs including, but not limited to, accounting, legal, human resources, consulting, and investor relations ~~fees,~~fees. Additionally, if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and expense as ~~well~~a result of our preparation for commercial operations, especially as ~~increased director~~it relates to the sales and ~~officer insurance premiums,~~marketing of our product candidates.

Severance-related expense

In June 2020, we communicated notice to five employees of the termination of their employment as a result of the discontinuation of our OCU300 product candidate for the treatment of symptoms associated with ~~operating as~~oGVHD. This reduction represented one-third of our workforce at the time of communication. All terminations were “without cause” and each employee received termination benefits upon departure. The termination dates varied for each employee and ranged from June 30, 2020 to December 31, 2020. As a ~~public company.~~

~~Table of Contents~~

~~Change in fair value of derivative liabilities~~

~~Change in fair value of derivative liabilities includes the change in fair value each reporting period~~result of the ~~conversion and change in control features embedded in certain convertible notes, which were required~~workforce reduction, we expect to ~~be bifurcated and recognized at fair value.~~

~~Interest Expense~~

~~Interest expense primarily includes debt coupon interest,~~pay severance benefits of $0.4 million throughout the ~~amortization~~remainder of ~~debt issuance costs, and~~2021. During the ~~accretion~~three months ended March 31, 2021, we made severance payments of ~~the discount created by the bifurcation of embedded derivatives from convertible debt.~~$0.3 million.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of financial statements in conformity with ~~generally accepted accounting principles~~GAAP requires us to make judgments, estimates, and assumptions in the preparation of our condensed consolidated financial statements. Actual results could differ from those estimates. There were no material changes to our critical accounting policies and estimates as reported in our ~~2019~~2020 Annual Report.

Results of Operations

Comparison of the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

The following table summarizes the results of ~~Ocugen’s~~our operations for the three months ended March 31, 2021 and 2020 ~~and 2019:~~(in thousands):


		Three Months Ended March 31,									Three months ended March 31,
(in thousands)		2020		2019		Change
									2021		2020		Change

Operating expenses:	Operating expenses:							Operating expenses:
Research and development	Research and development	$	1,652	$	3,793	$	(2,141)	Research and development	$	2,872	$	1,652	$	1,220

General and administrative	General and administrative	2,277		1,048		1,229		General and administrative	4,185		2,277		1,908
Total operating expenses	Total operating expenses	3,929		4,841		(912)		Total operating expenses	7,057		3,929		3,128
Loss from operations	Loss from operations	(3,929)		(4,841)		912		Loss from operations	(7,057)		(3,929)		(3,128)
Other income (expense):	Other income (expense):							Other income (expense):
Change in fair value of derivative liability		—		(776)		776
Interest income		—		1		(1)

Interest expense	Interest expense	(15)		(696)		681		Interest expense	(20)		(15)		(5)
Other expense		—		(1)		1

Total other income (expense)	Total other income (expense)	(15)		(1,472)		1,457		Total other income (expense)	(20)		(15)		(5)
Net loss	Net loss	$	(3,944)	$	(6,313)	$	2,369	Net loss	$	(7,077)	$	(3,944)	$	(3,133)

Research and development expense

Research and development expense decreased by $2.1 million for the three months ended March 31, 2020 when compared to the three months ended March 31, 2019 primarily as a result of a decrease in program development and clinical trial activities of $2.2 million, partially offset by an increase of $0.1 million in other costs primarily related to an increase in intellectual property professional fees.

The $2.2 million decrease in program development and clinical trial activities is primarily due to a $2.5 million decrease in OCU310 clinical and manufacturing activities, which is no longer in development. This decrease was offset by a $0.4 million increase in clinical activities related to our Phase 3 clinical trial of OCU300.

~~General and administrative expense~~

~~General and administrative expenses~~ increased by $1.2 million for the three months ended March 31, ~~2020 when~~2021 compared to the three months ended March 31, ~~2019.~~2020. The increase was primarily due to ~~a $0.8~~an increase of $0.7 million ~~increase in~~related to OCU400 preclinical activities, $0.4 million related to COVAXIN development, $0.3 million related to OCU200 preclinical activities, $0.2 million related to professional fees, and ~~a $0.3~~$0.1 million ~~increase in insurance costs~~ related to ~~operating as~~stock-based compensation expense, partially offset by a ~~public company.~~

~~Change in fair value~~decrease of ~~derivative liability~~

~~The change in fair value of derivative liability was zero for the three months ended March 31, 2020 compared to a loss of $0.8~~$0.5 million ~~due to a change in fair value of derivatives~~ related to ~~convertible debt instruments during~~ the ~~three months ended March 31, 2019.~~discontinuation of OCU300 clinical trial activities in 2020.

~~Interest~~General and administrative expense

~~Interest~~General and administrative expense ~~was a de minimis amount for the three months ended March 31, 2020 and $0.7~~increased by $1.9 million for the three months ended March 31, ~~2019.~~2021 compared to the three months ended March 31, 2020. The ~~decrease in interest expense~~increase was primarily due to incurring $1.2 million in costs associated with obtaining an increase in the ~~April 2019 conversions~~authorized shares of ~~all previously-issued convertible debt.~~our common stock including proxy solicitation fees and an increase of $0.5 million related

to stock-based compensation expense. See Note 12 in the notes to the condensed consolidated financial statements included in this report for additional information about the increase in the authorized shares of our common stock.

Liquidity and Capital Resources

As of March 31, ~~2020,~~2021, we had ~~$3.3~~$44.9 million in cash, cash equivalents, and restricted cash. We have not generated ~~any~~significant 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~~the issuance of convertible notes, ~~payable,~~debt, and ~~debt.~~grant proceeds. Specifically, since our inception and through March 31, ~~2020,~~2021, we have raised an aggregate of ~~$51.6~~$118.4 million to fund our operations, of which ~~$39.5~~$105.8 million was from gross proceeds from the sale of our common stock and warrants, $10.3 million was from the issuance of convertible notes, ~~$1.6~~$2.1 million was from ~~borrowings under the EB-5 Program (defined below) inclusive of principal and accrued interest,~~debt, and $0.2 million was from grant proceeds.

OnIn February 2021, we issued and sold 3.0 million shares of our common stock at an offering price of $7.65 per share in the February 2021 Registered Direct Offering pursuant to a securities purchase agreement. We received net proceeds of $21.2 million. For additional information about the February 2021 Registered Direct Offering, see Note 8 in the notes to the condensed consolidated financial statements included in this report. In April 2021, we issued and sold 10.0 million shares of our common stock at an offering price of $10.00 per share in the April 2021 Registered Direct Offering pursuant to a securities purchase agreement with healthcare-focused institutional investors. We received net proceeds of $93.4 million. For additional information about the April 2021 Registered Direct Offering, see Note 12 in the notes to the condensed consolidated financial statements included in this report.

Additionally, during the three months ended March 31, 2021, we sold 1.0 million shares of our common stock in the August 2020 ATM. We received net proceeds of $4.8 million. The offering was made pursuant to our effective "shelf" registration statement on Form S-3 filed with the SEC on March 27, 2020, the ~~President~~base prospectus contained therein dated May 5, 2020, and the prospectus supplement related to the offering dated August 17, 2020. As of March 31, 2021, we had remaining capacity to raise $3.3 million by issuing shares of our common stock under the ~~United States signed into law~~prospectus supplement in connection with the ~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), a sweeping stimulus bill intended to bolster~~August 2020 ATM. For additional information about the ~~U.S. economy, among other things, and provide emergency assistance to qualifying businesses and individuals. On April 30,~~August 2020 ~~we were granted a loan (the “Loan”) from Silicon Valley Bank,~~ATM, see Note 8 in the ~~aggregate amount of $0.4 million, pursuant~~notes to the ~~Paycheck Protection Program (the "PPP") of the CARES Act. The Loan was~~condensed consolidated financial statements included in ~~the form of a promissory note which matures on April 30, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 30, 2020.~~this report.

Since our inception, we have devoted substantial resources to research and development and have incurred significant net losses and ~~expect to~~may continue to incur net losses ~~for~~in the ~~foreseeable~~ future. We incurred net losses of approximately ~~$3.9~~$7.1 million and ~~$6.3~~$3.9 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. As of March 31, ~~2020,~~2021, we had an accumulated deficit of ~~$55.4 million. In addition, as of March 31, 2020, we had accounts payable and accrued expenses of $2.9 million and indebtedness of $1.6~~$80.4 million.

The following table shows a summary of our cash flows for the ~~periods indicated:~~three months ended March 31, 2021 and 2020 (in thousands):

Operating activities

Cash used in operating activities was $5.3 million for the three months ended March 31, 2021 compared to $4.7 million for the three months ended March 31, ~~2020 compared with $2.7 million for the three months ended March 31, 2019.~~2020. The increase in cash used in operating activities was primarily driven by ~~a decrease~~an increase in ~~accounts payable and accrued expenses and a decrease in~~our research and development expenses for product candidates, including COVAXIN, during ~~2020~~the three months ended March 31, 2021 as compared to ~~2019.~~

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the three months ended March 31, 2020.

Investing activities

Cash used in investing activities was $0.3 million for the three months ended March 31, 2021 compared to $0.1 million for the three months ended March 31, ~~2020 compared with a de minimis amount for~~2020. The increase in cash used in investing activities was driven by an increase in purchases of property and equipment during the three months ended March 31, ~~2019.~~2021 as compared to the three months ended March 31, 2020.

Financing activities

Cash provided by financing activities was $26.3 million for the three months ended March 31, 2021 compared to $0.5 million for the three months ended March 31, ~~2020 compared to $1.4 million for~~2020. During the three months ended March 31, ~~2019. Cash~~2021, cash provided by financing activities ~~for~~primarily consisted of gross proceeds of $22.9 million received from the February 2021 Registered Direct Offering, gross proceeds of $5.0 million received under August 2020 ATM, and $0.2 million in proceeds from the exercise of stock options, partially offset by payments of equity issuance costs of $1.8 million. During the three months ended March 31, 2020, ~~primarily relates to an additional borrowing under the EB-5 Program (defined below) on March 26, 2020. Cash~~cash provided by financing activities primarily consisted of proceeds from debt issuance of $0.5 million.

In April 2020, we were granted a loan from SVB in the aggregate amount of $0.4 million, pursuant to the PPP of the CARES Act. The loan was in the form of a promissory note dated April 30, 2020 in favor of SVB. The PPP Note matures on April 30, 2022 and bears interest at a rate of 1.0% per annum. Principal and interest payments are payable monthly commencing on either (i) the date the SBA compensates SVB for any forgiven amounts or (ii) 10 months after the ~~three months~~end of our loan forgiveness covered period, which ended in October 2020. Certain amounts of the loan may be forgiven if they are used for qualifying expenses as described by the PPP. If the PPP Note is fully forgiven, we will not be responsible for any payments. As of March 31, ~~2019 primarily relates to~~2021, there was $0.4 million of principal outstanding under the ~~issuance of convertible notes.~~

~~Indebtedness~~PPP Note.

In September 2016, pursuant to the ~~U.S. Government’s Immigrant Investor Program, commonly known as the~~ EB-5 program, ~~(the “EB-5 Program”),~~ we entered into ~~an arrangement (the “EB-5~~the EB-5 Loan ~~Agreement”)~~Agreement to borrow up to $10.0 million from ~~EB5~~EB-5 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~~product candidates 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. ~~Under the terms and conditions~~As of ~~the EB-5 Loan Agreement, the Company borrowed $0.5 million on March 26, 2020. At~~ March 31, ~~2020,~~2021, there was $1.5 million of principal outstanding under the EB-5 ~~program.~~

On April 22, 2020, we issued promissory notes (the "April 2020 Notes") with an aggregate principal amount of $5.6 million to existing investors in connection with an exchange of our Series A Warrants. The April 2020 Notes have a maturity date of April 21, 2021 and do not bear interest. We may prepay the April 2020 Notes in whole or in part at any time without penalty or premium. In the event that we consummate a financing transaction that generates cash to us, we are required to use 20% of the net proceeds of such transaction to redeem the outstanding under each April 2020 Note if the transaction occurs on or prior to August 22, 2020, and 30% of the net proceeds if the transaction occurs after August 22, 2020. As of May 1, 2020, there was $5.6 million of principal outstanding under the April 2020 Notes. For more information regarding the April 2020 Notes, see Note 10 to our condensed consolidated financial statements included in this report.Loan Agreement.

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 ~~activities~~ of our product candidates, ~~increase~~contract to manufacture our ~~headcount and~~product candidates, 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;~~FDA including EUA for COVAXIN;

•future costs of manufacturing and ~~commercialization;~~commercialization, including COVAXIN if authorized or approved;

•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 operating as a public company;

•the expenses needed to attract and retain skilled personnel;

•the extent to which we in-license or acquire other products, product candidates, or ~~technologies.~~technologies; and

As•the impact of ~~March 31, 2020,~~the COVID-19 pandemic.

Although we ~~had $3.3 million in~~believe our cash, cash equivalents, and restricted ~~cash. This amount is unlikely~~cash will enable us to ~~meet~~fund our ~~near-term~~operating expenses and capital requirements through at least one year from the date the condensed consolidated financials included in this report are issued, our management plans to continue to raise additional capital to support the development and ~~will not meet~~commercialization of our capital requirements over the next 12 months. Our management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include, but are not limited to:product candidates through public and private placements of equity and/or debt, payments from potential strategic research and development, sale of assets, ~~and~~government grants, licensing and/or collaboration arrangements with pharmaceutical companies or other ~~institutions.~~institutions, or other funding from the government. 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.

As previously disclosed, on December 27, 2020, we received a deficiency letter from the NASDAQ Capital Market ("Nasdaq") due to the bid price of our common stock falling below the minimum bid price for continued listing under Nasdaq listing rules for 30 consecutive days. In response to the COVID-19 pandemic and related extraordinary market conditions, Nasdaq has tolled the compliance period for non-compliance with the minimum bid price listing requirement, effective April 16, 2020, until June 30, 2020 (the "Tolling Period"). Following the Tolling Period, we will have until September 8, 2020 to regain compliance with the applicable minimum bid price. We may regain compliance during or after the Tolling Period by maintaining a bid price of our common stock above $1.00 for ten consecutive business days. If we are unable to regain compliance with Nasdaq listing rules regarding the price of our common stock in a timely manner, our common stock may become subject to delisting and we may find it difficult or impracticable to raise additional funds through public equity offerings.

As a result of these factors, together with the anticipated increase in spending that will be necessary to continue to develop our products, we have concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements included in this report are issued. See Note 1 to our condensed consolidated financial statements included in this report for additional information.

Off-Balance Sheet Arrangements

We do 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 the ~~U.S. Securities and Exchange Commission ("SEC").~~SEC.

Recently Adopted Accounting Pronouncements

For a discussion of recently adopted accounting pronouncements, see Note 2 in the notes to ~~our~~the condensed consolidated financial statements included in this report.

Other Company Information

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Item 4. 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)~~amended (the ~~“Exchange Act”~~"Exchange Act"), as of March 31, ~~2020.~~2021. 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 the SEC’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.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are subject to claims in legal proceedings arising in the normal course of our business. ~~To our knowledge, there~~We do not believe that we are ~~no threatened or~~currently party to any pending legal actions that could reasonably be expected to have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Item 1A. Risk Factors.

Except as set forth below, there have been no material changes in our risk factors as previously disclosed in our ~~2019~~2020 Annual Report. The risks described in our ~~2019~~2020 Annual Report and this Quarterly Report on Form 10-Q are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or future results.

~~Additional Risks Related~~The ongoing COVID-19 pandemic and actions taken in response to ~~Our Financial Position~~it may result in disruptions to our business operations, which would have a material adverse effect on our business, financial position, operating results, and ~~Capital Requirements~~cash flows.

In December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Further, the President of the United States declared the COVID-19 pandemic a national emergency. The Governor of Pennsylvania declared a state of emergency and has issued orders impacting our business operations.

We ~~have certain promissory notes outstanding,~~are developing COVAXIN, the COVID-19 vaccine candidate developed in India by Bharat Biotech, for the ~~aggregate principal amount of approximately $5.6 million. If we are unable~~U.S. market pursuant to ~~pay~~ the ~~senior promissory notes when due, we will be in default.~~

On April 22, 2020, we issued promissory notes in the aggregate principal amount of approximately $5.6 million. The April 2020 Notes are due on April 21, 2021. In the event we do not have the cash resources to pay the April 2020 Notes when due, such notes will be in default. Upon an event of default, interest shall accrue under each April 2020 Note at a rate of 18% per annum and each holder may require us to redeem all or any portion of the applicable April 2020 Note.Covaxin Agreement. Our ability to ~~repay the April 2020 Notes upon maturity~~obtain EUA or BLA approval depends on ~~our future performance and~~Bharat Biotech’s ability to ~~raise additional sources~~complete its ongoing Phase 3 clinical trial of ~~cash,~~COVAXIN in India, in which ~~are subject~~they have enrolled 25,800 participants between 18 to ~~economic, financial, competitive~~98 years of age, including 2,433 over the age of 60 and ~~other factors beyond our control. If we are unable to generate sufficient cash to repay the April 2020 Notes upon maturity, we may be required to adopt one~~4,500 with comorbidities. Moreover, if authorized or more alternatives, such as restructuring our debt, selling assets or obtaining additional equity capital on terms that may be onerous or highly dilutive. If we desire to refinance the April 2020 Notes,approved, our ability to ~~do so~~commercialize COVAXIN in the U.S. market will depend in part on our ability obtain sufficient doses of the ~~capital markets~~vaccine from Bharat Biotech to meet our anticipated needs for 2021. As of the date of this Quarterly Report on Form 10-Q, India is currently experiencing a significant surge in COVID-19 infections, including novel and variant strains of the virus, which has resulted in overwhelmed hospitals and shortages in oxygen, ventilators, and medical supplies. In addition, the Indian government has imposed a temporary suspension of the export of COVID-19 vaccines as a result of this wave of COVID-19 infections in India. The ongoing surge in COVID-19 infections in India presents risks that the completion of Bharat Biotech’s Phase 3 clinical trial will be delayed, due, in part by the diversion of medical resources and COVAXIN supply, patients’ unwillingness to complete required follow-up, and the emergence of new strains of the virus that may reduce the efficacy of COVAXIN or otherwise complicate clinical development. The Indian government’s temporary suspension of the export of COVID-19 vaccines may require Bharat Biotech to focus its resources, including COVAXIN supply, on domestic Indian requirements and thereby prevent Bharat Biotech from shipping supply of COVAXIN abroad, including to the United States. Any such developments in clinical development or vaccine supply may cause significant delays in our ability to submit required documentation to the FDA, to obtain EUA or BLA approval for COVAXIN in the United States or to commercialize COVAXIN in the United States on our anticipated timelines. We are currently waiting for additional data from Bharat Biotech from the ongoing Phase 3 clinical trial for an EUA submission. Due to the current surge in COVID-19 cases in India, this process is taking longer than anticipated. We are continuing to monitor the situation and intend to file the EUA submission as soon as practicable. Any significant delays could adversely affect our business, results of operations, or financial ~~condition at such time. We~~condition.

With respect to our gene therapy product candidates, we currently expect to commence two Phase 1/2a clinical trials for OCU400, our product candidate for the treatment of multiple IRDs, in the United States in the second half of 2021. If COVID-19 continues to spread in the United States and elsewhere, it may delay enrollment in these planned clinical trials, and in any clinical trials that we may commence for our other product candidates in 2022. Some patients may not be able to ~~engage~~comply with clinical trial protocols if any future quarantines impede patient movement or interrupt healthcare services. Moreover, limitations on global international travel may delay key trial activities, including necessary interactions with regulators, ethics committees, and other important agencies and contractors. We may be faced with limitations in ~~any of these activities or engage in these activities on desirable terms, which could result in a default~~employee resources that would otherwise be focused on the ~~April 2020 Notes. As a result, our business, results~~conduct of ~~operations, financial condition and prospects could be negatively impacted.~~

~~Our existing and future indebtedness may limit cash flow available~~clinical trials, including because of sickness of employees or their families or the desire of employees to ~~invest in the ongoing needs~~avoid contact with large groups of ~~our business.~~

As of May 1, 2020, we had incurred indebtedness consisting of (i) April 2020 Notes in the aggregate principal amount of approximately $5.6 million, (ii) $0.4 million of outstanding principal borrowings from Silicon Valley Bank under the PPPpeople. Any of the ~~CARES Act, which matures on April 30, 2022~~above could delay our planned clinical trials for OCU400 or prevent us from completing these clinical trials at all, and bears interest at a rate of 1% per annum, payable monthly commencing on November 30, 2020 and (iii) $1.5 million of outstanding principal borrowings under the EB-5 Loan Agreement, which we are required to repay on the seventh anniversary of the date of the last disbursement under the EB-5 Loan Agreement (unless terminated earlier pursuant to the terms of the EB-5 Loan Agreement). Our obligations under the EB-5 Loan Agreement are secured by substantially all of our assets other than our intellectual property. We could in the future incur additional indebtedness beyond the April 2020 Notes, the PPP Loan, and our borrowings under the EB-5 Loan Agreement.

~~Our existing or future debt could have significant adverse consequences, including:~~

•~~requiring us to dedicate a substantial portion of cash flow from operations or cash on hand to the payment of interest on, and principal of, our debt;~~

•~~increasing our vulnerability to adverse changes in general economic, industry and market conditions;~~

•~~subjecting us to restrictive covenants that may reduce~~harm our ability to ~~take certain corporate actions~~obtain approval for OCU400 or ~~obtain further debt or equity financing;~~

•~~limiting~~ our ~~flexibility in planning for, or reacting to, changes in our business and our industry; and~~

•~~placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.~~

~~Pursuant to the terms of our outstanding April 2020 Notes, we are required to use a specified percentage of the net proceeds we receive from this offering and from~~ other financing transactions we may enter into, subject to limited exceptions, to redeem the outstanding amount under the April 2020 Notes, until such notes are paid in full. The required percentage is 20% with respectproduct candidates.

Moreover, we may experience additional disruptions that could severely impact our business and development activities, including, but not limited to, ~~any financing transaction occurring~~strain on or prior to August 22, 2020, and after such date, the required percentage is 30%. Our failure to use the applicable percentage of net proceeds from any financing transaction would result in a default under the April 2020 Notes, which would result in default interest becoming payable and would entitle the holders of the April 2020 Notes to require us to redeem the April 2020 Notes in full. The requirement that we apply a percentage of the net proceeds from any financing transaction will reduce the amounts available to fund working capital, capital expenditures, product development effortsour suppliers and other ~~general corporate purposes.~~

~~In addition, a failure~~third parties, possibly resulting in supply disruptions of our product candidates for preclinical development and potential future clinical trials we expect to ~~comply with the covenants under the EB-5 Loan Agreement, including covenants to take or avoid specific actions as set forth above, could result~~initiate, decrease in ~~an event of default and acceleration of amounts due. If an event of default occurs~~clinical enrollment in any clinical trials we initiate, and the Lender accelerates the amounts due under the EB-5 Loan Agreement, we may not be able to make accelerated payments, and the Lender could seek to enforce security interests in the collateral securing such indebtedness.

All or a portion of the PPP Loan may be forgiven by the Small Business Administration (the "SBA") upon application by us beginning 60 days, but not later than 120 days, after loan approval and upon documentation of expenditures in accordance with the SBA’s requirements. No more than 25% of the amount forgiven can be attributable to non-payroll costs. We will be required to repay any portion of the outstanding principal that is not forgiven, along with accrued interest, in accordance with the amortization schedule described above, and we cannot provide any assurance that we will be eligible for loan forgiveness, that we will ultimately apply for forgiveness, or that any amount of the PPP Loan will ultimately be forgiven by the SBA. If we are unable to obtain forgiveness of all or any portion of the PPP Loan, our liquidity could be reduced and our business, financial condition and results of operations may be adversely affected.

~~In order to satisfy our current and future debt service obligations, we will be required~~ability to raise ~~funds from external sources. We may be unable to arrange for additional financing to pay the amounts due under our existing debt. Funds from external sources may not be available~~capital when needed on acceptable terms, if at all. ~~Our failure~~Disruptions in our operations or supply chain, whether as a result of government intervention, restricted travel, quarantine requirements, or otherwise, could negatively impact our ability to ~~satisfy~~proceed with our ~~current~~clinical trials, preclinical development, and ~~future debt obligations~~other activities and delay our ability to receive product approval and generate revenue.

In addition, the continued spread of COVID-19 may lead to severe disruption and volatility in the global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets. It is possible that the continued spread of COVID-19 could cause an economic slowdown or recession or cause other unpredictable events, each of which could adversely affect our ~~financial condition and results of operations.~~

~~Our debt agreements contain restrictions that limit our flexibility in operating our business.~~

Our April 2020 Notes and the EB-5 Loan Agreement impose on us certain operating and financial restrictions. These covenants limit our ability and the ability of our subsidiaries, under certain circumstances, to, among other things:

•~~incur or guarantee additional indebtedness;~~

•~~create or incur any mortgage, lien, pledge, security interest or other encumbrance upon our property or assets;~~

•~~redeem, repurchase, repay or make any payment in respect of other indebtedness, other than regularly scheduled interest payments;~~

•~~redeem or repurchase any equity interests of the Company;~~

•~~pay dividends and distributions;~~

•~~abandon any material intellectual property rights;~~


Delaware			04-3522315
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31 ~~2020~~, 202 1 and December 31, ~~2019~~20 20	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March ~~31, 2020~~ 3 1 , 202 1 and ~~2019~~20 20	5
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March ~~31, 2020~~ 3 1 , 202 1 and ~~2019~~20 20	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March ~~31, 2020~~ 3 1 , 202 1 and ~~2019~~20 20	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2526
Item 4.	Controls and Procedures	2526
PART II—OTHER INFORMATION			27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2928
Item 3.	Defaults Upon Senior Securities	2928
Item 4.	Mine Safety Disclosures	2928
Item 5.	Other Information	2928
Item 6.	Exhibits	3029
Signatures			3130


		March 31, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	3,193,188	$	7,444,052	Cash and cash equivalents	$	44,792	$	24,039
Advance for COVAXIN supply						Advance for COVAXIN supply	4,988		0
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,169,297		1,322,167		Prepaid expenses and other current assets	1,576		1,839
Asset held for sale		7,000,000		7,000,000

Total current assets	Total current assets	11,362,485		15,766,219		Total current assets	51,356		25,878
Property and equipment, net	Property and equipment, net	248,997		222,464		Property and equipment, net	762		633
Restricted cash	Restricted cash	151,100		151,016		Restricted cash	151		151
Other assets	Other assets	551,163		667,747		Other assets	1,578		714
Total assets	Total assets	$	12,313,745	$	16,807,446	Total assets	$	53,847	$	27,376
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	1,548,309	$	1,895,613	Accounts payable	$	1,040	$	395
Accrued expenses		1,383,658		2,270,045

Accrued expenses and other current liabilities						Accrued expenses and other current liabilities	2,703		2,941
Short-term debt, net						Short-term debt, net	374		234
Operating lease obligation	Operating lease obligation	176,616		172,310		Operating lease obligation	164		44
Other current liabilities		206,415		205,991
Total current liabilities	Total current liabilities	3,314,998		4,543,959		Total current liabilities	4,281		3,614
Non-current liabilities	Non-current liabilities					Non-current liabilities
Operating lease obligation, less current portion	Operating lease obligation, less current portion	117,142		163,198		Operating lease obligation, less current portion	1,375		389
Long term debt, net	Long term debt, net	1,580,560		1,072,123		Long term debt, net	1,702		1,823
Other non-current liabilities		3,940		9,755

Total non-current liabilities	Total non-current liabilities	1,701,642		1,245,076		Total non-current liabilities	3,077		2,212
Total liabilities	Total liabilities	5,016,640		5,789,035		Total liabilities	7,358		5,826
Commitments and contingencies (Note 8)
Commitments and contingencies (Note 11)						Commitments and contingencies (Note 11)	0		0
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Convertible preferred stock, $0.01 par value, 10,000,000 shares authorized, 7 issued and outstanding at March 31, 2020 and December 31, 2019		—		—
Common stock, $0.01 par value, 200,000,000 authorized, 52,746,728 shares issued and 52,625,228 shares outstanding at March 31, 2020 and December 31, 2019		527,467		527,467
Treasury Stock, at cost, 121,500 shares at March 31, 2020 and December 31, 2019		(47,864)		(47,864)

Convertible preferred stock; $0.01 par value; 10,000,000 shares authorized at March 31, 2021 and December 31, 2020						Convertible preferred stock; $0.01 par value; 10,000,000 shares authorized at March 31, 2021 and December 31, 2020
Series A; 7 issued and outstanding at March 31, 2021 and December 31, 2020						Series A; 7 issued and outstanding at March 31, 2021 and December 31, 2020	0		0
Series B; 54,745 and 0 issued and outstanding at March 31, 2021 and December 31, 2020, respectively						Series B; 54,745 and 0 issued and outstanding at March 31, 2021 and December 31, 2020, respectively	1		0
Common stock; $0.01 par value; 200,000,000 authorized; 188,277,852 and 184,133,384 shares issued at March 31, 2021 and December 31, 2020, respectively; 188,156,352 and 184,011,884 shares outstanding at March 31, 2021 and December 31, 2020, respectively						Common stock; $0.01 par value; 200,000,000 authorized; 188,277,852 and 184,133,384 shares issued at March 31, 2021 and December 31, 2020, respectively; 188,156,352 and 184,011,884 shares outstanding at March 31, 2021 and December 31, 2020, respectively	1,883		1,841
Treasury stock, at cost, 121,500 shares at March 31, 2021 and December 31, 2020						Treasury stock, at cost, 121,500 shares at March 31, 2021 and December 31, 2020	(48)		(48)
Additional paid-in capital	Additional paid-in capital	62,241,145		62,018,632		Additional paid-in capital	125,032		93,059
Accumulated deficit	Accumulated deficit	(55,423,643)		(51,479,824)		Accumulated deficit	(80,379)		(73,302)
Total stockholders’ equity	Total stockholders’ equity	7,297,105		11,018,411		Total stockholders’ equity	46,489		21,550
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	12,313,745	$	16,807,446	Total liabilities and stockholders’ equity	$	53,847	$	27,376


		Three months ended March 31,							Three months ended March 31,
		2020		2019			2021		2020
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net loss	Net loss	$	(3,943,819)	$	(6,312,606)	Net loss	$	(7,077)	$	(3,944)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	Depreciation expense	18,283		14,604		Depreciation expense	44		18
Non-cash interest expense	Non-cash interest expense	14,749		695,469		Non-cash interest expense	20		15
Non-cash lease expense	Non-cash lease expense	47,696		73,273		Non-cash lease expense	68		48
Change in fair value of derivative liability		—		776,273

Stock-based compensation expense	Stock-based compensation expense	222,513		415,202		Stock-based compensation expense	833		222

Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Prepaid expenses and other assets	Prepaid expenses and other assets	227,870		49,555		Prepaid expenses and other assets	493		228
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(1,225,853)		1,723,507		Accounts payable and accrued expenses	405		(1,225)
Lease obligations	Lease obligations	(47,862)		(102,488)		Lease obligations	(69)		(48)
Net cash used in operating activities	Net cash used in operating activities	(4,686,423)		(2,667,211)		Net cash used in operating activities	(5,283)		(4,686)
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchase of property and equipment	Purchase of property and equipment	(52,653)		(10,581)		Purchase of property and equipment	(261)		(53)
Net cash used in investing activities	Net cash used in investing activities	(52,653)		(10,581)		Net cash used in investing activities	(261)		(53)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Financing lease principal payments	Financing lease principal payments	(5,964)		(5,964)		Financing lease principal payments	(6)		(6)
Payment of debt issuance costs		(5,740)		(85,233)
Proceeds from issuance of common stock						Proceeds from issuance of common stock	28,125		0
Payment of equity issuance costs						Payment of equity issuance costs	(1,822)		0
Proceeds from issuance of debt	Proceeds from issuance of debt	500,000		1,450,000		Proceeds from issuance of debt	0		500
Payments of debt issuance costs						Payments of debt issuance costs	0		(6)
Net cash provided by financing activities	Net cash provided by financing activities	488,296		1,358,803		Net cash provided by financing activities	26,297		488
Effect of changes in exchange rate on cash		—		(282)
Net decrease in cash, cash equivalents and restricted cash		(4,250,780)		(1,319,271)
Cash, cash equivalents and restricted cash at beginning of period		7,595,068		1,778,613
Cash, cash equivalents and restricted cash at end of period		$	3,344,288	$	459,342
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	20,753		(4,251)
Cash, cash equivalents, and restricted cash at beginning of period						Cash, cash equivalents, and restricted cash at beginning of period	24,190		7,595
Cash, cash equivalents, and restricted cash at end of period						Cash, cash equivalents, and restricted cash at end of period	$	44,943	$	3,344
Supplemental disclosure of non-cash transactions:	Supplemental disclosure of non-cash transactions:					Supplemental disclosure of non-cash transactions:

Right-of-use asset related to operating leases (Note 8)		$	—	$	427,751

Series B Convertible Preferred Stock issuance						Series B Convertible Preferred Stock issuance	$	4,988	$	0
Equity issuance costs						Equity issuance costs	$	108	$	0
Purchase of property and equipment						Purchase of property and equipment	$	44	$	0
Right-of-use asset related to operating leases						Right-of-use asset related to operating leases	$	926	$	0


		As of March 31,							As of March 31,
		2020		2019			2021		2020
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents	Cash and cash equivalents	$	3,193,188	$	308,717	Cash and cash equivalents	$	44,792	$	3,193
Restricted cash	Restricted cash	151,100		150,625		Restricted cash	151		151
Total cash, cash equivalents and restricted cash		$	3,344,288	$	459,342
Total cash, cash equivalents, and restricted cash						Total cash, cash equivalents, and restricted cash	$	44,943	$	3,344


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Common Stock					Treasury Stock		Additional Paid in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit				Total	Series A Convertible Preferred Stock			Series B Convertible Preferred Stock				Common Stock					Treasury Stock			Additional Paid-in Capital				Accumulated Deficit		Total
		Shares	Amount																					Shares			Amount					Amount				Amount				Additional Paid-in Capital	Accumulated Deficit	Total
Balance at December 31, 2019		52,746,728	$	527,467	$	(47,864)	$	62,018,632	$	—	$	(51,479,824)	$	11,018,411
Balance at December 31, 2020															Balance at December 31, 2020	7		$	0	0	$	0	184,133,384		$	1,841		$	(48)	$	93,059			$	(73,302)		$	21,550
Stock-based compensation expense	Stock-based compensation expense	—	—		—		222,513		—		—		222,513		Stock-based compensation expense	—		—		—	—		—		—			—		833				—			833
Issuance of common stock for option exercises															Issuance of common stock for option exercises	—		—		—	—		157,468		2			—		174				—			176
At-the-market common stock issuance, net															At-the-market common stock issuance, net	—		—		—	—		987,000		10			—		4,839				—			4,849
Registered direct offering common stock issuance, net															Registered direct offering common stock issuance, net	—		—		—	—		3,000,000		30			—		21,174				—			21,204
Series B Convertible Preferred Stock issuance, net															Series B Convertible Preferred Stock issuance, net	—		—		54,745	1		—		—			—		4,953				—			4,954
Net loss	Net loss	—	—		—		—		—		(3,943,819)		(3,943,819)		Net loss	—		—		—	—		—		—			—		—				(7,077)			(7,077)
Balance at March 31, 2020		52,746,728	$	527,467	$	(47,864)	$	62,241,145	$	—	$	(55,423,643)	$	7,297,105
Balance at March 31, 2021															Balance at March 31, 2021	7		$	0	54,745	$	1	188,277,852		$	1,883		$	(48)	$	125,032			$	(80,379)		$	46,489


	March 31, 2020		December 31, 2019
Accrued expenses:
Research and development	$	120,092	$	271,322
Clinical	406,213		421,788
Professional fees	486,395		917,568
Employee-related	369,499		624,420
Other	1,459		34,947
Total accrued expenses	$	1,383,658	$	2,270,045


Note Issuance Date	Note Principal Amount		Fair Value of Embedded Derivatives		Debt Issuance Costs		Carrying Value upon Issuance
January 2018	$	5,000,000	$	(2,657,711)	$	(35,969)	$	2,306,320
June 2018	1,000,000		(724,216)		(3,000)		272,784
November 2018	1,150,400		(21,127)		(50,646)		1,078,627
December 2018	150,000		(2,857)		(14,310)		132,833
January 2019	450,000		(182,882)		(29,358)		237,760
February 2019	1,000,000		(302,379)		(55,875)		641,746
Total	$	8,750,400	$	(3,891,172)	$	(189,158)	$	4,670,070


	March 31, 2020		December 31, 2019
Right-of-use assets, net	$	302,990	$	344,574

Current lease obligations	$	176,616	$	172,310
Non-current lease obligations	117,142		163,198
Total lease liabilities	$	293,758	$	335,508


For the Years Ending December 31,	Amount
Remainder of 2020	$	144,169
2021	160,909
2022	11,354
Total	$	316,432
Less: present value adjustment	(22,674)
Present value of minimum lease payments	$	293,758


~~Executive Officer~~	~~Position~~	~~Stock Options Granted~~
~~Sanjay Subramanian~~	~~Chief Financial Officer~~	~~369,256~~
~~Daniel Jorgensen~~	~~Chief Medical Officer~~	~~109,913~~
~~Rasappa Arumugham~~	~~Chief Scientific Officer~~	~~144,766~~
~~Kelly Beck~~	~~Vice President, Investor Relations & Administration~~	~~31,916~~
~~Vijay Tammara~~	~~Senior Vice President, Regulatory and Quality~~	~~20,573~~


Exhibit						Description

~~10.1+~~3.1*						Amendment to Sixth Amended and Restated ~~Employment Agreement, dated as~~Certificate of ~~January 1, 2020, by and between the Registrant and Shankar Musunuri (filed as Exhibit 10.1~~Incorporation related to the ~~Registrant's Current Report on Form 8-K as filed on January 3, 2020, and incorporated herein by reference).~~Increase in Authorized Shares of Common Stock

~~10.2+~~3.2						~~Amended~~Certificate of Designation of Preferences, Rights and ~~Restated Employment Agreement, dated as~~Limitations of ~~January 1, 2020, by and between the Registrant and Daniel Jorgensen~~Series B Convertible Preferred Stock of Ocugen, Inc. (filed as ~~exhibit 10.2~~Exhibit 3.5 to the ~~Registrant's Current~~Company’s Annual Report on Form ~~8-K as~~10-K filed on ~~January 3, 2020,~~March 19, 2021 and incorporated herein by reference).

~~10.3+~~10.1*#						~~Amended~~Co-Development, Supply and ~~Restated Employment~~Commercialization Agreement, dated as of January ~~1, 2020,~~31, 2021, by and between the Registrant and ~~Rasappa Arumugham (filed as exhibit 10.3 to the Registrant's Current Report on Form 8-K as filed on January 3, 2020, and incorporated herein by reference).~~Bharat Biotech International Limited

10.410.2+						~~Amended and Restated Employment~~Form of Performance-Vested Stock Option Agreement ~~dated as of January 1, 2020, by and between the Registrant and Vijay Tam~~m ar a.under Ocugen, Inc. 2019 Equity Incentive Plan

~~10.5*+~~10.3						~~Amended and Restated Employment~~Form of Securities Purchase Agreement dated as of ~~January 1, 2020,~~February 7, 2021 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 9, 2021 and incorporated herein by ~~and between the Registrant and Kelly Beck.~~reference)

~~10.6*+~~10.4						~~Amendment to Executive Employment~~Form of Securities Purchase Agreement dated as of ~~January 1, 2020,~~April 23, 2021 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 27, 2021 and incorporated herein by ~~and between Registrant and Sanjay Subramanian.~~reference)

31.1*						Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002

31.2*						Certification of the Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002

32.1**						Certifications of the Chief Executive Officer and Chief Financial Officer as required by 18 U.S.C. 1350

101.INS*						Inline XBRL Instance Document

101.SCH*						Inline XBRL Taxonomy Extension Schema Document

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL


			Ocugen, Inc.

Dated: May ~~8, 2020~~7, 2021			/s/ Shankar Musunuri
			Shankar Musunuri, Ph.D., MBA Chief Executive Officer and Chairman (Principal Executive Officer)

Dated: May ~~8, 2020~~7, 2021			/s/ Sanjay Subramanian
			Sanjay Subramanian Chief Financial Officer (Principal Financial Officer and Accounting Officer)