Merger and Pre-Merger Financing

12 Months Ended

Dec. 31, 2020

Business Combinations [Abstract]

Merger and Pre-Merger Financing

Pre-Merger Financing

In June 2019, OpCo and Histogenics entered into a Securities Purchase Agreement (as amended, the "Financing SPA") with certain accredited investors (the "Investors"). Pursuant to the Financing SPA, among other things, (i) immediately prior to the Merger, OpCo issued 2.2 million shares of common stock to the Investors, (ii) on October 4, 2019, the Company issued 2.2 million shares of the Company's common stock to the Investors and (iii) on October 4, 2019, the Company issued three series of warrants to purchase shares 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 (the "Pre-Merger Financing"). See Note 11 for additional information.

Merger with Histogenics

On September 27, 2019, the Company completed the Merger in accordance with the terms of the Merger Agreement. The Merger was structured 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 the right to receive Histogenics’ common stock and securities convertible into or exercisable for Histogenics’ common stock. Immediately following the Merger, the former equity holders of OpCo owned 84.25% of the outstanding capital stock of the Company, and the equity holders of the Company immediately before the Merger owned 15.75% of the outstanding capital stock of the Company.

In accordance with FASB ASC Topic 805, Business Combinations (“ASC 805”), the Company concluded that, while Histogenics was the legal acquirer, OpCo was the accounting acquirer due to the fact that (i) OpCo’s shareholders had the majority of the voting rights in Ocugen, (ii) OpCo held all of the board seats of the combined company, and (iii) OpCo management held all key positions in the management of the combined company. The Company further concluded that Histogenics did not meet the definition 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 in a single identifiable asset or a group of similar identifiable assets. Therefore, the Merger was accounted for as a reverse asset acquisition.

NeoCart

Histogenics’ product, NeoCart, is an innovative cell therapy that utilizes various aspects of its restorative cell therapies platform to treat tissue injury in the field of orthopedics, specifically cartilage damage in the knee. In December 2017, Histogenics entered into the License and Commercialization Agreement with MEDINET Co., Ltd. (“MEDINET”) to grant MEDINET a license under certain patents, patent applications, know-how, and technology to develop and commercialize certain therapeutic products related to the NeoCart program. In December 2018, after receiving feedback from the FDA regarding the need for an additional clinical trial prior to submission of a BLA, Histogenics discontinued the development of NeoCart.

In connection with the Merger, on May 8, 2019, Histogenics entered into an asset purchase agreement (the "Asset Purchase Agreement") with Medavate Corp., pursuant to which Histogenics agreed to sell substantially all of its assets relating to its NeoCart program for $6.5 million. The parties subsequently amended the Asset Purchase Agreement to increase the purchase price to $7.0 million with the purchase price increasing 10% per month (or any portion thereof) starting October 31, 2019 if the closing date of the Asset Purchase Agreement did not occur prior to October 31, 2019. The Company may terminate the Asset Purchase Agreement at any time without recourse. The Asset Purchase Agreement closing date did not occur as of December 31, 2020 and the Company has not terminated the Asset Purchase Agreement as of December 31, 2020.

The NeoCart asset was held for sale as of December 31, 2019. The NeoCart asset qualified as held for sale as of the date of the Merger and was carried at its original fair value less cost to sell based on a quoted price of $7.0 million, which was an observable Level 2 fair value input. The Company concluded during the year ended December 31, 2020, that a sale of the NeoCart asset was no longer probable to be completed within one year from the date of the Merger and therefore the NeoCart asset did not qualify as held for sale as of December 31, 2020. See Note 2 for additional information.