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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)  
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
Or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to         

Commission file number: 001-36080
IVERIC bio, Inc.
(Exact name of registrant as specified in its charter)
Delaware 20-8185347
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One Penn Plaza, 35th Floor 10119
New York, NY(Zip Code)
(Address of principal executive offices)
(212845-8200
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareISEEThe Nasdaq Global Select 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     No
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging 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 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No
As of November 2, 2020 there were 89,567,544 shares of Common Stock, $0.001 par value per share, outstanding.





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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words "anticipate," "believe," "goals," "estimate," "expect," "intend," "may," "might," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
the potential benefits of our business plan and strategy to develop our therapeutic and gene therapy product candidates and pursue our collaborative gene therapy sponsored research programs;
the actual and expected effects of the COVID-19 pandemic and related response measures on our business and operations, including the timing, costs, conduct and outcome of our research and development programs, and financial position;
our expectations regarding the impact of results from GATHER1, our completed Phase 3 clinical trial evaluating Zimura for the treatment of geographic atrophy secondary to age-related macular degeneration on our business strategy, including our plans to pursue further development of Zimura and/or seek potential collaboration or outlicensing opportunities;
the timing, costs, conduct and outcome of GATHER2, our ongoing Phase 3 clinical trial evaluating Zimura for the treatment of geographic atrophy secondary to age-related macular degeneration, and expectations regarding the potential for Zimura to receive regulatory approval for the treatment of geographic atrophy secondary to age-related macular degeneration based on the clinical trial results we have received to date and future results from the GATHER2 clinical trial and any other trials we or a potential collaborator may conduct;
the timing, costs, conduct and outcome of OPH2005, our ongoing clinical trial evaluating Zimura for the treatment of autosomal recessive Stargardt disease, including expectations regarding the recruitment of additional patients for this trial;
our ability to establish and maintain arrangements and capabilities for the manufacture of our therapeutics and gene therapy product candidates, including scale up and validation of the manufacturing process for Zimura drug substance and securing the supply of Zimura drug product and the polyethylene glycol starting material for our expected needs;
our expectations related to our use of available cash;
our estimates regarding expenses, future revenues, capital requirements and needs for, and ability to obtain, additional financing;
our ability to consummate business development transactions, including potential collaboration or out-licensing opportunities for further development and potential commercialization of Zimura or in-license or other opportunities to acquire rights to additional product candidates or technologies to treat retinal diseases;
the timing, costs, conduct and outcome of our ongoing and planned clinical trials, including statements regarding the timing of the initiation and completion of, and the receipt of results from, such clinical trials, the costs to conduct such clinical trials, and the impact of the results of such clinical trials on our business strategy;
the timing, costs, conduct and outcome of our ongoing and planned research and preclinical development activities, including statements regarding the timing of the initiation and completion of, and the receipt of results from, such activities, the costs to conduct such activities, and the impact of the results of such activities on our business strategy;
the potential advantages of our product candidates and other technologies that we are pursuing, including the advantages and limitations of inhibition of complement factor C5 and HtrA1, including our hypotheses regarding complement inhibition as a mechanism of action to treat geographic atrophy, and of gene therapy, including the use of minigenes;
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our estimates regarding the number of patients affected by the diseases our product candidates and development programs are intended to treat;
the timing of and our ability to obtain marketing approval of our product candidates, and the ability of our product candidates to meet existing or future regulatory standards;
our estimates regarding the potential market opportunity for our product candidates;
our sales, marketing and distribution capabilities and strategy;
the rate and degree of potential market acceptance and clinical utility of our product candidates, if approved;
the potential receipt of revenues from future sales of our product candidates, if approved;
our intellectual property position;
the impact of existing and new governmental laws and regulations; and
our competitive position.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and our stockholders 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, particularly in the "Risk Factors" section, that 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, licenses, dispositions, joint ventures 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 Quarterly Report on Form 10-Q and our other periodic reports, completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.
USE OF TRADEMARKS
    The trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We have omitted the ® and ™ designations, as applicable, for the trademarks named in this Quarterly Report on Form 10-Q after their first reference in this Quarterly Report on Form 10-Q.
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
IVERIC bio, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
 September 30, 2020December 31, 2019
Assets  
Current assets  
Cash and cash equivalents$122,819 $125,699 
Available for sale securities108,303  
Prepaid expenses and other current assets1,513 2,043 
Income tax receivable1,764 882 
Total current assets234,399 128,624 
Property and equipment, net62 173 
Right-of-use asset, net134 496 
Income tax receivable, non-current 882 
Other assets 12 
Total assets$234,595 $130,187 
Liabilities and Stockholders' Equity   
Current liabilities  
Accrued research and development expenses$12,867 $6,860 
Accounts payable and accrued expenses7,012 5,629 
Lease liability54 495 
Total current liabilities19,933 12,984 
Lease liability, non-current76  
Total liabilities20,009 12,984 
Stockholders' equity  
Preferred stock—$0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding
$ $ 
Common stock—$0.001 par value, 200,000,000 shares authorized, 89,554,044 and 49,627,064 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively
90 50 
Additional paid-in capital754,136 597,679 
Accumulated deficit(539,641)(480,526)
Accumulated other comprehensive income1  
Total stockholders' equity214,586 117,203 
Total liabilities and stockholders' equity$234,595 $130,187 
   
The accompanying unaudited notes are an integral part of these financial statements.
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IVERIC bio, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share data)
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Operating expenses:   
Research and development$18,841 $10,383 $45,311 $28,077 
General and administrative6,643 4,674 17,930 15,353 
Total operating expenses25,484 15,057 63,241 43,430 
Loss from operations(25,484)(15,057)(63,241)(43,430)
Interest income33 495 437 1,782 
Other income (expense)1  (6)151 
Loss before income tax benefit(25,450)(14,562)(62,810)(41,497)
Income tax benefit (125)(3,695)(116)
Net loss$(25,450)$(14,437)$(59,115)$(41,381)
Comprehensive loss$(25,449)$(14,437)$(59,114)$(41,381)
Net loss per common share:  
Basic and diluted$(0.27)$(0.35)$(0.87)$(1.00)
Weighted average common shares outstanding:
Basic and diluted92,675 41,552 67,931 41,486 
   
The accompanying unaudited notes are an integral part of these financial statements.

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IVERIC bio, Inc.
Unaudited Consolidated Statements of Stockholders' Equity
(in thousands)
 Preferred StockCommon StockAdditional
paid-in
capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
 SharesAmountSharesAmount
Balance at December 31, 2019 $ 49,627 $50 $597,679 $(480,526)$— $117,203 
Issuance of common stock under employee stock compensation plans— — 105 — 179 — — 179 
Share-based compensation— — — — 2,324 — — 2,324 
Net loss— — — — — (15,076)— (15,076)
Balance at March 31, 2020 $ 49,732 $50 $600,182 $(495,602)$ $104,630 
Issuance of common stock and pre-funded warrants through underwritten offering, net of issuance costs— — 28,503 28 116,855 — — 116,883 
Issuance of common stock in connection with private offering, net of issuance costs.— — 8,649 9 33,228 — — 33,237 
Issuance of common stock under the exercise of pre-funded warrants— — 2,500 2 (2)— —  
Issuance of common stock under employee stock compensation plans — — 105 — 7 — — 7 
Share-based compensation— — — — 1,873 — — 1,873 
Net loss— — — — — (18,589)— (18,589)
Balance at June 30, 2020 $ 89,489 $89 $752,143 $(514,191)$ $238,041 
Issuance of common stock under employee stock compensation plans— — 65 1 146 — — 147 
Share-based compensation— — — — 1,847 — — 1,847 
Net loss— — — — — (25,450)— (25,450)
Unrealized gain on available for sale securities, net of tax — — — — — — 1 1 
Balance at September 30, 2020 $ 89,554 $90 $754,136 $(539,641)$1 $214,586 
 Preferred StockCommon StockAdditional
paid-in
capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
 SharesAmountSharesAmount
Balance at December 31, 2018 $ 41,397 $41 $545,585 $(421,667)$— $123,959 
Issuance of common stock under employee stock compensation plans— — 56 — 41 — — 41 
Share-based compensation— — — — 2,470 — — 2,470 
Net loss— — — — — (12,501)— (12,501)
Balance at March 31, 2019 $ 41,453 $41 $548,096 $(434,168)$ $113,969 
Issuance of common stock under employee stock compensation plans— — 24 —  — —  
Share-based compensation— — — — 2,207 — — 2,207 
Net loss— — — — — (14,443)— (14,443)
Balance at Balance at June 30, 2019 $ 41,477 $41 $550,303 $(448,611)$ $101,733 
Issuance of common stock under employee stock compensation plans— — 50 1 39 — — 40 
Share-based compensation— — — — 2,126 — — 2,126 
Issuance of common stock— — 75 — — — —  
Net loss— — — — — (14,437)— (14,437)
Balance at September 30, 2019 $ 41,602 $42 $552,468 $(463,048)$ $89,462 

The accompanying unaudited notes are an integral part of these financial statements.
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IVERIC bio, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
 Nine Months Ended September 30,
 20202019
Operating Activities  
Net loss$(59,115)$(41,381)
Adjustments to reconcile net loss to net cash used in operating activities  
Depreciation and other expense108 123 
Amortization of premium and discounts on investment securities115  
Gain on sale of property and equipment (150)
Deferred income taxes  
Share-based compensation6,044 6,803 
Changes in operating assets and liabilities:  
Income tax receivable 1,635 
Prepaid expense and other assets542 979 
Accrued interest receivable(112) 
Accrued research and development expenses6,007 (2,387)
Accounts payable and accrued expenses1,383 (2,203)
Net cash used in operating activities(45,028)(36,581)
Investing Activities  
Purchase of marketable securities(108,305) 
Proceeds from sale of assets 150 
Net cash (used in) provided by investing activities(108,305)150 
Financing Activities  
Proceeds from employee stock plan purchases 333 81 
Proceeds from follow-on public offering, net116,883  
Proceeds from private-placement, net33,237  
Net cash provided by financing activities150,453 81 
Net change in cash and cash equivalents(2,880)(36,350)
Cash and cash equivalents  
Beginning of period125,699 131,201 
End of period$122,819 $94,851 
Supplemental disclosure of cash paid  
Income tax refunds received$3,327 $1,765 

   The accompanying unaudited notes are an integral part of these financial statements.
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IVERIC bio, Inc.
Notes to Unaudited Consolidated Financial Statements
(in thousands, except per share data)
1. Business
Description of Business and Organization
    IVERIC bio, Inc. (the “Company”), formerly Ophthotech Corporation, was incorporated on January 5, 2007, in Delaware. The Company is a science-driven biopharmaceutical company focused on the discovery and development of novel treatment options for retinal diseases with significant unmet medical needs. The Company is currently developing both therapeutic product candidates for age-related retinal diseases and gene therapy product candidates for orphan inherited retinal diseases ("IRDs").
    The Company's therapeutics portfolio consists of its clinical stage product candidate Zimura® (avacincaptad pegol), a complement C5 inhibitor, and its preclinical product candidate IC-500, a High temperature requirement A serine peptidase 1 protein ("HtrA1") inhibitor. The Company is currently targeting the following diseases with Zimura:
geographic atrophy ("GA"), which is the advanced stage of age-related macular degeneration ("AMD") and is characterized by marked thinning or atrophy of retinal tissue, leading to irreversible loss of vision; and
autosomal recessive Stargardt disease ("STGD1"), which is characterized by progressive damage to the central portion of the retina (the "macula") and other retinal tissue of young adults, leading to loss of vision.
The Company is developing IC-500 for GA and potentially other age-related retinal diseases.
    The Company's gene therapy portfolio consists of two product candidates in preclinical development (IC-100 and IC-200) and several ongoing collaborative sponsored research programs, each of which uses adeno-associated virus ("AAV") for gene delivery. These AAV mediated gene therapy programs are targeting the following orphan IRDs:
rhodopsin-mediated autosomal dominant retinitis pigmentosa ("RHO-adRP") which is characterized by progressive and severe bilateral loss of vision leading to blindness;
IRDs associated with mutations in the BEST1 gene, including Best vitelliform macular dystrophy ("Best disease"), which is generally characterized by bilateral egg yolk-like lesions in the macula, which, over time, progress to atrophy and loss of vision;
Leber congenital amaurosis type 10 ("LCA10") which is characterized by severe bilateral loss of vision at or soon after birth;
autosomal recessive Stargardt disease; and
IRDs associated with mutations in the USH2A gene, which include Usher syndrome type 2A and USH2A-associated non-syndromic autosomal recessive retinitis pigmentosa.
The Company is developing IC-100 for RHO-adRP and IC-200 for BEST1-related IRDs.
2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2019 filed with the Securities and Exchange Commission ("SEC") on February 27, 2020.
Basis of Presentation and Consolidation
In the opinion of management, the Company’s condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes included in the Annual Report.
The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from the Company’s audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations
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for the three and nine months ended September 30, 2020 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.
Segment and geographic information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating and reporting segment.
Use of Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company's Consolidated Balance Sheets and the amount of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, accounting for research and development costs, accounting for share-based compensation and accounting for income taxes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. The carrying amounts reported in the Balance Sheets for cash and cash equivalents are valued at cost, which approximates their fair value.
Available for Sale Securities
The Company considers securities with original maturities of greater than 90 days to be available for sale securities. Available for sale securities with original maturities of greater than one year are recorded as non-current assets. Available for sale securities are recorded at fair value and unrealized gains and losses are recorded within other comprehensive income.
On a quarterly basis, the Company reviews the status of each security in an unrealized loss position, to evaluate the existence of potential credit losses. The Company first considers whether it intends to sell, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet this criteria, the Company considers a number of factors to determine if the decline in fair value has resulted from credit losses or other factors, including but not limited to: (1) the extent of the decline; (2) changes to the rating of the security by a rating agency; (3) any adverse conditions specific to the security; and (4) other market conditions that may affect the fair value of the security. If this assessment indicates that a credit loss exists and the present value of cash flows expected to be collected is less than the amortized cost basis, an allowance for credit losses is required for the credit loss. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Financial Instruments
Cash equivalents and available for sale securities are reflected in the accompanying financial statements at fair value. The carrying amount of accounts payable and accrued expenses, including accrued research and development expenses, approximates fair value due to the short-term nature of those instruments.
Accounting Standards Codification, or ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value standard also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company reviews investments on a periodic basis for other than temporary impairments. This review is subjective as it requires management to evaluate whether an event or change in circumstances has occurred in the period that may have a significant adverse effect on the fair value of the investment. The Company uses the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company classifies its corporate debt securities within the fair value hierarchy as Level 2 assets, as it primarily utilizes quoted market prices or rates for similar instruments to value these securities.

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The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:

Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market. The Company's Level 1 assets consist of investments in money market funds and U.S. Treasury securities.
Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. The Company's Level 2 assets consist of investments in investment-grade corporate debt securities.
Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability. The Company does not hold any assets that are measured using Level 3 inputs.

Concentration of Credit Risk
The Company's financial instruments that are exposed to concentration of credit risk consist primarily of cash, cash equivalents and available for sale securities. The Company maintains its cash in bank accounts, the balances of which generally exceed federally insured limits. The Company maintains its cash equivalents in investments in money market funds and, at times, in U.S. Treasury securities and investment-grade corporate debt securities with original maturities of 90 days or less.
The Company’s available for sale securities are also invested in U.S. Treasury securities, investment-grade corporate debt securities and asset-backed securities. The Company has not recognized any losses from credit risks on such investments during any of the periods presented. The Company believes it is not exposed to significant credit risk on its cash, cash equivalents and available for sale securities.
Concentration of Suppliers
The Company has historically relied on a single third-party manufacturer to provide the drug substance for Zimura on a purchase order basis. The Company also has historically relied on a single third-party manufacturer to provide fill/finish services for clinical supplies of Zimura. The Company has engaged one additional third-party manufacturer to provide drug substance for Zimura and one additional third-party manufacturer to provide fill/finish services for clinical supplies of Zimura. In addition, the Company currently relies upon a single third-party supplier to supply on a purchase order basis the proprietary polyethylene glycol starting material ("PEG starting material") used to manufacture Zimura. Furthermore, the Company and its contract manufacturers currently rely upon sole-source suppliers of certain raw materials and other specialized components of production used in the manufacture and fill/finish of Zimura.  The Company currently relies exclusively upon a single third-party contract manufacturer for IC-100 and IC-200 and also relies on sole-source suppliers for certain starting materials used in the manufacture of such product candidates. The Company currently relies upon a single third-party contract manufacturer to conduct process development, scale-up and cGMP manufacture of IC-500 for preclinical toxicology studies and clinical trials. If the Company’s third-party manufacturers or fill/finish service providers should become unavailable to the Company for any reason, including as a result of capacity constraints, different business objectives, financial difficulties, insolvency or the COVID-19 pandemic, the Company believes that there are a limited number of potential replacement manufacturers, and the Company likely would incur added costs and delays in identifying or qualifying such replacements.
Foreign Currency Translation
The Company considers the U.S. dollar to be its functional currency. Expenses denominated in foreign currencies are translated at the exchange rate on the date the expense is incurred. The effect of exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars is included in the Consolidated Statements of Operations and Comprehensive Loss. Foreign exchange transaction gains and losses are included in the results of operations and are not material in the Company's financial statements.
Leases
The Company has leased its office spaces and has entered into various other agreements in conducting its business. At inception, the Company determines whether an agreement represents a lease and at commencement evaluates each lease agreement to determine whether the lease is an operating or financing lease. Some of the Company's lease agreements have contained renewal options, tenant improvement allowances, rent holidays and rent escalation clauses, although its remaining outstanding lease for its principal offices has no further options, allowances, holidays or clauses.
Pursuant to ASC 842, Leases, the Company records an operating lease right-of-use asset and an operating lease liability on its Consolidated Balance Sheet. Right-of-use lease assets represent the Company's right to use the underlying asset for the lease term and the lease obligation represents the Company's commitment to make the lease payments arising from the lease. Right-
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of-use lease assets and obligations are recognized at the commencement date based on the present value of remaining lease payments over the lease term. As the Company’s leases do not provide an implicit discount rate, the Company has used an estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The right-of-use lease asset includes any lease payments made prior to commencement and excludes any lease incentives. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. For all office lease agreements the Company combines lease and nonlease components. Leases with an initial term of 12 months or less are not recorded on the Company's Consolidated Balance Sheet.
Property and Equipment
Property and equipment, which consists mainly of clinical equipment, computers, software, other office equipment, and leasehold improvements, are carried at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the respective assets, generally three to ten years, using the straight-line method. Amortization of leasehold improvements is recorded over the shorter of the lease term or estimated useful life of the related asset.
Research and Development
The Company's research and development expenses primarily consist of costs associated with the manufacturing, development and preclinical and clinical testing of its product candidates and costs associated with its collaborative gene therapy sponsored research programs. The Company's research and development expenses consist of:
external research and development expenses incurred under arrangements with third parties, such as academic research collaborators, contract research organizations ("CROs"), and contract development and manufacturing organizations ("CDMOs") and other vendors for the production and analysis of drug substance and drug product; and
employee-related expenses for employees dedicated to research and development activities, including salaries, benefits and share-based compensation expense.
Research and development expenses also include costs of acquired product licenses, in-process research and development, and related technology rights where there is no alternative future use, costs of prototypes used in research and development, consultant fees and amounts paid to collaborators.
All research and development expenses are charged to operations as incurred in accordance with ASC 730, Research and Development. The Company accounts for non-refundable advance payments for goods and services that will be used in future research and development activities as expenses when the service has been performed or when the goods have been received, rather than when the payment is made.
Income Taxes
The Company utilizes the liability method of accounting for deferred income taxes, as set forth in ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance is established against deferred tax assets when, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company's policy is to record interest and penalties on uncertain tax positions as income tax expense.
Share-Based Compensation
The Company follows the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and non-employee directors and consultants, including employee stock options, restricted stock units (“RSUs”) and options granted to employees to purchase shares under the 2016 Employee Stock Purchase Plan (the “ESPP”). Share-based compensation expense is based on the grant date fair value estimated in accordance with the provisions of ASC 718 and is generally recognized as an expense over the requisite service period, net of estimated forfeitures. For grants containing performance-based vesting provisions, expense is recognized over the estimated achievement period only when the performance-based milestone is deemed probable of achievement. If performance-based milestones are later determined not to be probable of achievement, then all previously recorded stock-based compensation expense associated with such options will be reversed during the period in which the Company makes this determination.

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The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from its estimates. The Company uses historical data to estimate pre-vesting forfeitures and record share-based compensation expense only for those awards that are expected to vest. To the extent that actual forfeitures differ from the Company's estimates, the difference is recorded as a cumulative adjustment in the period the estimates were revised.
Stock Options
The Company estimates the fair value of stock options granted to employees, non-employee directors and consultants on the date of grant using the Black-Scholes option-pricing model. The Company's computation of stock-price volatility is based on daily historical volatility during the time period that corresponds to the expected option term. The Company's computation of expected term is determined using the expected term of stock option grants to employees based on an analysis of actual option exercises. The Company utilizes a dividend yield of zero based on the fact that the Company has never paid cash dividends to stockholders and has no current intentions to pay cash dividends. The risk-free interest rate is based on the zero-coupon U.S. Treasury yield at the date of grant for a term equivalent to the expected term of the option.
The weighted-average assumptions used to estimate grant date fair value of stock options using the Black-Scholes option pricing model were as follows for the three and nine month periods ended September 30, 2020 and 2019:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Expected common stock price volatility117%89%117%88%
Risk-free interest rate
0.22%-0.26%
1.38%-1.84%
0.22%-1.34%
1.38%-2.54%
Expected term of options (years)4.86.14.65.7
Expected dividend yield
RSUs
The Company estimates the fair value of RSUs granted to employees using the closing market price of the Company's common stock on the date of grant.
ESPP
In April 2016, the Company's board of directors adopted the ESPP pursuant to which the Company may sell up to an aggregate of 1,000,000 shares of its common stock. The ESPP was approved by the Company’s stockholders in June 2016. The ESPP is considered compensatory and the fair value of the discount and look back provision are estimated using the Black-Scholes option-pricing model and recognized over the six month withholding period prior to purchase.
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standard Update ("ASU") 2016-13 Financial Instruments (Topic 326) Measurement of Credit Losses on Financial Instrument (“CECL”).  ASU 2016-13 requires an allowance for expected credit losses on financial assets be recognized as early as day one of the instrument.  This ASU departs from the incurred loss model which means the probability threshold is removed.  It considers more forward-looking information and requires the entity to estimate its credit losses as far as it can reasonably estimate.  This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this accounting standard effective January 1, 2020 with no material impact to its financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including, among other changes, the consideration of costs and benefits when evaluating disclosure requirements. For public companies, the amendments became effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual periods. The Company adopted this accounting standard effective January 1, 2020 with no material impact to its financial statements.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).  This guidance became effective for fiscal years beginning after December 15, 2019, and for interim periods
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within those fiscal years. The Company adopted this accounting standard effective January 1, 2020 with no material impact to its financial statements.
In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808), which clarifies the interaction between the guidance for collaborative arrangements (Topic 808) and the new revenue recognition standard (Topic 606). For public companies, the amendments became effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual periods. The Company adopted this accounting standard effective January 1, 2020 with no material impact to its financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company adopted this accounting standard effective January 1, 2020 with no material impact to its financial statements.

3. Common Stock

In June 2020, the Company completed an underwritten public offering in which the Company sold 28,503,220 shares of its common stock, which includes the exercise in full of the underwriters’ option to purchase additional shares of the Company’s common stock, at a price to the public of $4.100 per share and at a price to the underwriters of $3.854 per share. The Company also sold to certain investors in lieu of common stock, pre-funded warrants to purchase 1,914,280 shares of its common stock at a price to the public of $4.099 per share underlying each pre-funded warrant, and at a price to the underwriters of $3.853 per share underlying each pre-funded warrant.

Concurrently with the June 2020 public offering, the Company completed a private placement in which the Company sold 8,649,453 shares of its common stock to affiliates of Vivo Capital, LLC and Samsara BioCapital, LP, at a sale price equal to the price to the public in the underwritten public offering.

The net proceeds from the public offering and private placement, after deducting underwriting discounts, underwriting and placement agent commissions and other expenses totaling $10.1 million, was approximately $150.1 million.

The Company evaluated the pre-funded warrants for liability or equity classification in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Derivatives and Hedging. Based on the provisions governing the pre-funded warrants in the applicable agreement, the Company determined that the pre-funded warrants meet the criteria required to be classified as an equity award subject to the guidance in ASC 815-10 and 815-40 and should effectively be treated as outstanding common shares in both basic and diluted earnings per share calculations.

4. Net Loss Per Common Share
Basic and diluted net loss per common share is determined by dividing net loss by the weighted average common shares and pre-funded warrants outstanding during the period. Basic and diluted shares outstanding includes the weighted average effect of the Company's outstanding pre-funded warrants as the exercise of such pre-funded warrants requires nominal consideration to be given for the delivery of the corresponding shares of common stock. As of September 30, 2020, the Company had 3,164,280 pre-funded warrants outstanding, which if exercised, would increase the number of shares of common stock issued and outstanding. For the periods when there is a net loss, shares underlying stock options and RSUs have been excluded from the calculation of diluted net loss per common share because the effect of including such shares would be anti-dilutive. Therefore, the weighted average common shares used to calculate both basic and diluted net loss per common share would be the same.
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The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Basic and diluted net loss per common share calculation:  
Net loss$(25,450)$(14,437)$(59,115)$(41,381)
Weighted average common shares outstanding - basic and dilutive92,675 41,552 67,931 41,486 
Net loss per share of common stock - basic and diluted$(0.27)$(0.35)$(0.87)$(1.00)

The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding for the periods presented, as the effect of including such shares would be anti-dilutive:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Stock options outstanding7,426 5,468 7,426 5,468 
Restricted stock units1,727 695 1,727 695 
Total9,153 6,163 9,153 6,163 

5. Cash, Cash Equivalents and Available for Sale Securities
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at the date of purchase to be cash equivalents. As of September 30, 2020 and December 31, 2019, the Company had cash and cash equivalents of approximately $122.8 million and $125.7 million, respectively. Cash and cash equivalents included cash of $3.7 million at September 30, 2020 and $3.2 million at December 31, 2019. Cash and cash equivalents at September 30, 2020 and December 31, 2019 included $119.1 million and $122.5 million, respectively, of investments in money market funds and certain investment-grade corporate debt securities with original maturities of 90 days or less.
The Company considers securities with original maturities of greater than 90 days at the date of purchase to be available for sale securities. As of September 30, 2020, the Company held available for sale securities of $108.3 million, all of which have maturities of less than one year. The Company held no available for sale securities at December 31, 2019, respectively.
The Company evaluates securities with unrealized losses, if any, to determine whether the decline in fair value has resulted from credit loss or other factors. The Company has determined that there were no credit losses in fair value of its investments as of September 30, 2020.
The Company classifies these securities as available for sale. However, the Company does not currently intend to sell its investments and the Company believes it is more likely than not that the Company will recover the carrying value of these investments.
The Company believes that its existing cash, cash equivalents and available for sale securities as of September 30, 2020 will be sufficient to fund its currently planned capital expenditure requirements and operating expenses for at least the next 12 months from the filing of this Quarterly Report on Form 10-Q. This estimate is based on the Company’s current business plan, which includes the continuation of its clinical development programs for Zimura, the progression of its IC-100 and IC-200 programs into the clinic, and the advancement of its IC-500 development program. This estimate assumes that the Company will enroll approximately 400 patients in the GATHER2 trial. This estimate does not reflect any additional expenditures resulting from the potential in licensing or acquisition of additional product candidates or technologies, commencement of any new sponsored research programs or any associated development the Company may pursue. The Company has based this estimate on assumptions that may prove to be wrong and the Company could use its available capital resources sooner than it currently expects.
Available for sale securities, including carrying value and estimated fair values, are summarized as follows:
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 As of September 30, 2020
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. Treasury securities45,220 1  45,221 
Corporate debt securities52,862 2 (5)52,859 
Asset-backed securities10,220 3  10,223 
Total108,302 6 (5)108,303 
The Company’s available for sale securities are reported at fair value on the Company’s Balance Sheets. Unrealized gains (losses) are reported within other comprehensive income in the statements of comprehensive loss. The cost of securities sold and any realized gains/losses from the sale of available for sale securities are based on the specific identification method. The changes in other comprehensive income associated with the unrealized gain on available for sale securities during the three and nine months ended September 30, 2020 and 2019, respectively, were as follows:
 Three months ended September 30,Nine Months Ended September 30, 2020
 2020201920202019
Beginning balance$ $ $ $ 
Current period changes in fair value before reclassifications, net of tax1  1  
Amounts reclassified from accumulated other comprehensive income, net of tax    
Total other comprehensive income1  1  
Ending balance$1 $ $1 $ 

6. Share-Based Compensation
Pursuant to the evergreen provisions of the Company's 2013 stock incentive plan (the "2013 Plan"), annual increases have resulted in the addition of an aggregate of approximately 10,539,000 additional shares to the 2013 Plan, including for 2020, an increase of approximately 1,985,000 shares, or approximately 4% of the total number of shares of the Company's common stock outstanding as of January 1, 2020. As of September 30, 2020, the Company had approximately 2,666,000 shares available for grant under the 2013 Plan.
In October 2019, the Company's board of directors adopted its 2019 Inducement Stock Incentive Plan (the “2019 Inducement Plan”) to reserve initially 1,000,000 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company as a material inducement to such individuals’ entry into employment with the Company within Rule 5635(c)(4) of the Nasdaq Listing Rules. The terms and conditions of the 2019 Inducement Plan are substantially similar to those of the 2013 Plan. In March 2020, the Company's board of directors amended the 2019 Inducement Plan to reserve an additional 1,000,000 shares of its common stock for issuance under the plan. As of September 30, 2020, the Company had approximately 610,000 shares available for grant under the 2019 Inducement Plan.
Share-based compensation expense, net of estimated forfeitures, includes expenses related to stock options and RSUs granted to employees, non-employee directors and consultants, as well as options granted to employees to purchase shares under the ESPP. Stock-based compensation by award type was as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Stock options$1,089 $1,447 $3,556 $4,557 
Restricted stock units723 667 2,411 2,197 
Employee stock purchase plan35 12 77 49 
Total$1,847 $2,126 $6,044 $6,803 
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The Company allocated stock-based compensation expense in the Company’s Consolidated Statements of Operations and Comprehensive Loss as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Research and development$882 $942 $2,986 $3,101 
General and administrative965 1,184 3,058 3,702 
Total$1,847 $2,126 $6,044 $6,803 
Stock Options
A summary of the stock option activity, weighted average exercise prices, options outstanding, exercisable and expected to vest as of September 30, 2020 is as follows (in thousands except weighted average exercise price):
 Number of Shares Underlying OptionsWeighted
Average
Exercise
Price
Outstanding, December 31, 20196,780 $10.89 
Granted990 $4.02 
Exercised(73)$2.55 
Forfeited(264)$16.21 
Expired(7)$1.59 
Outstanding, September 30, 20207,426 $9.88 
Vested and exercisable, September 30, 20203,968 $15.33 
Vested and expected to vest, September 30, 20207,114 $10.15 
As of September 30, 2020, there were approximately $7.2 million of unrecognized compensation costs, net of estimated forfeitures, related to stock option awards grants, which are expected to be recognized over a remaining weighted average period of 2.7 years.
RSUs
The following table presents a summary of the Company's outstanding RSU awards granted as of September 30, 2020 (in thousands except weighted average grant-date fair value):
Restricted
Stock
Units
Weighted Average
Grant-Date
Fair Value
Outstanding, December 31, 20191,481 $7.79 
Awarded470 $3.77 
Vested(126)$19.78 
Forfeited(98)$6.74 
Outstanding, September 30, 20201,727 $5.88 
Outstanding, Expected to vest1,515 $3.90 
As of September 30, 2020, there were approximately $4.2 million of unrecognized compensation costs, net of estimated forfeitures, related to RSUs grants, which are expected to be recognized over a remaining weighted average period of 2.6 years.
ESPP
As of September 30, 2020, there were 805,361 shares available for future purchases under the ESPP. There were 32,821 and 38,944 shares issued under the ESPP during the three months ended September 30, 2020 and 2019. There were 76,402 and 70,466 shares of common stock issued under the ESPP during the nine months ended September 30, 2020 and 2019. Cash proceeds from ESPP purchases were $147 thousand and $81 thousand during the nine months ended September 30, 2020 and 2019, respectively.

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7. Income Taxes    
For the three months ended September 30, 2020, the Company recorded no income tax benefit. For the nine months ended September 30, 2020, the Company recorded an income tax benefit of $3.7 million to reflect a settlement of a local tax audit and the associated decrease in the Company's related uncertain tax position, including interest and penalties. For the three and nine months ended September 30, 2019, the Company recorded an income tax benefit of $0.1 million primarily to reflect a settlement of a local tax audit.
In response to the COVID-19 pandemic, the U.S. Congress enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") on March 27, 2020. The CARES Act provides numerous tax provisions and other stimulus measures, including the immediate refund of minimum tax credits.  The Company has recorded a current tax receivable of approximately $1.8 million in anticipation of this refund.
The Company will continue to evaluate its ability to realize its deferred tax assets on a quarterly basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any additional changes to the valuation allowance recorded on deferred tax assets in the future would impact the Company’s income taxes.

8. Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value standard also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company's assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2020:
 Fair Value Measurement Using
 Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets   
Investments in money market funds*$119,079 $ $ 
Investments in U.S. Treasury securities$45,221 $ $ 
Investments in corporate debt securities$ $52,859 $ 
Investments in asset-backed securities$ $10,223 $ 
The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company's assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2019:
 Fair Value Measurement Using
 Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets   
Investments in money market funds*$108,585 $ $ 
Investments in corporate debt securities*$ $13,875 $ 
*Investments in money market funds and investment-grade corporate debt securities with maturities less than 90 days are reflected in cash and cash equivalents in the accompanying Consolidated Balance Sheets.
No transfer of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the three and nine months ended September 30, 2020.
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9. Commitments and Contingencies
Zimura - Archemix Corp.
The Company is party to an agreement with Archemix Corp. ("Archemix") under which the Company in-licensed rights in certain patents, patent applications and other intellectual property related to Zimura and pursuant to which the Company may be required to pay sublicense fees and make milestone payments (the "C5 License Agreement"). The Company recorded as an expense a $6.0 million milestone payment due to Archemix in its Consolidated Statement of Operations for the three and nine months ended September 30, 2020. The Company subsequently paid this milestone to Archemix in October 2020. In addition, under the C5 License Agreement, for each anti-C5 aptamer product that the Company may develop under the agreement, including Zimura, the Company is obligated to make additional payments to Archemix of up to an aggregate of $50.5 million if the Company achieves specified development, clinical and regulatory milestones, with $24.5 million of such payments relating to a first indication, $23.5 million of such payments relating to second and third indications and $2.5 million of such payments relating to sustained delivery applications. Under the C5 License Agreement, the Company is also obligated to make additional payments to Archemix of up to an aggregate of $22.5 million if the Company achieves specified commercial milestones based on net product sales of all anti-C5 products licensed under the agreement. The Company is also obligated to pay Archemix a double-digit percentage of specified non-royalty payments the Company may receive from any sublicensee of its rights under the C5 License Agreement. The Company is not obligated to pay Archemix a running royalty based on net product sales in connection with the C5 License Agreement.
IC-100 - University of Florida and the University of Pennsylvania
    Under its exclusive license agreement with the University of Florida Research Foundation, Incorporated ("UFRF") and the University of Pennsylvania ("Penn") for rights to IC-100, the Company is obligated to make payments to UFRF, for the benefit of Penn and UFRF (together, the "Licensors"), of up to an aggregate of $23.5 million if the Company achieves specified clinical, marketing approval and reimbursement approval milestones with respect to a licensed product and up to an aggregate of an additional $70.0 million if the Company achieves specified commercial sales milestones with respect to a licensed product. The Company is also obligated to pay UFRF, for the benefit of the Licensors, a low single-digit percentage of net sales of licensed products. The Company is also obligated to pay UFRF, for the benefit of the Licensors, a double-digit percentage of specified non-royalty payments the Company may receive from any third-party sublicensee of the licensed patent rights. Further, if the Company receives a rare pediatric disease priority review voucher from the United States Food and Drug Administration ("FDA") in connection with obtaining marketing approval for a licensed product and the Company subsequently uses such priority review voucher in connection with a different product candidate, the Company will be obligated to pay UFRF, for the benefit of the Licensors, aggregate payments in the low double-digit millions of dollars based on certain approval and commercial sales milestones with respect to such other product candidate. In addition, if the Company sells such a priority review voucher to a third party, the Company will be obligated to pay UFRF, for the benefit of the Licensors, a low double-digit percentage of any consideration received from such third party in connection with such sale.
IC-200 - University of Pennsylvania and the University of Florida
    Under its exclusive license agreement with Penn and UFRF for rights to IC-200, the Company is obligated to make payments to Penn, for the benefit of the Licensors, of up to an aggregate of $15.7 million if the Company achieves specified clinical, marketing approval and reimbursement approval milestones with respect to one licensed product and up to an aggregate of an additional $3.1 million if the Company achieves these same milestones with respect to a different licensed product. In addition, the Company is obligated to make payments to Penn, for the benefit of the Licensors, of up to an aggregate of $48.0 million if the Company achieves specified commercial sales milestones with respect to one licensed product and up to an aggregate of an additional $9.6 million if the Company achieves these same milestones with respect to a different licensed product. The Company is also obligated to pay Penn, for the benefit of the Licensors, a low single-digit percentage of net sales of licensed products. The Company is also obligated to pay Penn, for the benefit of the Licensors, a high single-digit to a mid-teen percentage of specified non-royalty payments the Company may receive from any third-party sublicensee of the licensed patent rights, with the applicable percentage based upon the stage of development of the sublicensed product at the time the Company enters into the sublicense. Further, if the Company receives a rare pediatric disease priority review voucher from the FDA in connection with obtaining marketing approval for a licensed product and the Company subsequently uses such priority review voucher in connection with a different product candidate outside the scope of the agreement, the Company will be obligated to pay Penn, for the benefit of the Licensors, aggregate payments in the low double-digit millions of dollars based on certain approval and commercial sales milestones with respect to such other product candidate. In addition, if the Company sells such a priority review voucher to a third party, the Company will be obligated to pay Penn, for the benefit of the Licensors, a high single-digit percentage of any consideration received from such third party in connection with such sale.
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miniCEP290 Program - University of Massachusetts
    Under its exclusive license agreement with the University of Massachusetts ("UMass") for its miniCEP290 program, which targets LCA10, which is associated with mutations in the CEP290 gene, the Company is obligated to pay UMass up to an aggregate of $14.75 million in cash and issue up to 75,000 shares of common stock of the Company if the Company achieves specified clinical and regulatory milestones with respect to a licensed product. In addition, the Company is obligated to pay UMass up to an aggregate of $48.0 million if the Company achieves specified commercial sales milestones with respect to a licensed product. The Company is also obligated to pay UMass royalties at a low single-digit percentage of net sales of licensed products. If the Company or any of its affiliates sublicenses any of the licensed patent rights or know-how to a third party, the Company will be obligated to pay UMass a high single-digit to a mid-tens percentage of the consideration received in exchange for such sublicense, with the applicable percentage based upon the stage of development of the licensed products at the time the Company or the applicable affiliate enters into the sublicense. If the Company receives a priority review voucher from the FDA in connection with obtaining marketing approval for a licensed product, and the Company subsequently uses such priority review voucher in connection with a different product candidate outside the scope of the agreement, the Company will be obligated to pay UMass a low-tens percentage of the fair market value of the priority review voucher at the time of approval of such product candidate and a low-twenties percentage of the fair market value of the priority review voucher at the time of achievement of a specified commercial sales milestone for such product candidate. In addition, if the Company sells such a priority review voucher to a third party, the Company will be obligated to pay UMass a low-thirties percentage of any consideration received from such third party in connection with such sale.
IC-500 - Former Equityholders of Inception 4
    Under the agreement and plan of merger between the Company and Inception 4, Inc. ("Inception 4"), pursuant to which the Company acquired Inception 4 and its HtrA1 inhibitor program (the "Inception 4 Merger Agreement"), the Company is obligated to make payments to the former equityholders of Inception 4 of up to an aggregate of $105 million, subject to the terms and conditions of the Inception 4 Merger Agreement, if the Company achieves certain specified clinical and regulatory milestones with respect to IC-500 or any other product candidate from its HtrA1 inhibitor program, with $45 million of such potential payments relating to GA and $60 million of such potential payments relating to wet AMD. Under the Inception 4 Merger Agreement, the Company does not owe any commercial milestones or royalties based on net sales. The future milestone payments will be payable in the form of shares of the Company's common stock, calculated based on the price of its common stock over a five-trading day period preceding the achievement of the relevant milestone, unless and until the issuance of such shares would, together with all other shares issued in connection with the acquisition, exceed an overall maximum limit of approximately 7.2 million shares, which is equal to 19.9% of the number of issued and outstanding shares of the Company's common stock as of the close of business on the business day prior to the closing date of the Inception 4 acquisition, and will be payable in cash thereafter. The Inception 4 Merger Agreement also includes customary indemnification obligations to the former equityholders of Inception 4, including for breaches of the representations and warranties, covenants and agreements of the Company and its subsidiaries (other than Inception 4) in the Inception 4 Merger Agreement.
Employment Contracts
    The Company also has letter agreements with certain employees that require the funding of a specific level of payments if certain events, such as a termination of employment in connection with a change in control or termination of employment by the employee for good reason or by the Company without cause, occur.
 Contract Service Providers
    In addition, in the course of normal business operations, the Company has agreements with contract service providers to assist in the performance of the Company’s research and development and manufacturing activities. Expenditures to CROs and CDMOs represent significant costs in preclinical and clinical development. Subject to required notice periods and the Company’s obligations under binding purchase orders and any cancellation fees that the Company may be obligated to pay, the Company can elect to discontinue the work under these agreements at any time. 
Legal Proceedings
On January 11, 2017, a putative class action lawsuit was filed against the Company and certain of its current and former executive officers in the United States District Court for the Southern District of New York, captioned Frank Micholle v. Ophthotech Corporation, et al., No. 1:17-cv-00210. On March 9, 2017, a related putative class action lawsuit was filed against the Company and the same group of its current and former executive officers in the United States District Court for the Southern District of New York, captioned Wasson v. Ophthotech Corporation, et al., No. 1:17-cv-01758. These cases were consolidated on March 13, 2018. On June 4, 2018, the lead plaintiff filed a consolidated amended complaint (the “CAC”). The CAC purports to be brought on behalf of shareholders who purchased the Company’s common stock between March 2, 2015
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and December 12, 2016. The CAC generally alleges that the Company and certain of its officers violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the results of the Company’s Phase 2b trial and the prospects of the Company’s Phase 3 trials for Fovista in combination with anti-VEGF agents for the treatment of wet AMD. The CAC seeks unspecified damages, attorneys’ fees, and other costs. The Company and individual defendants filed a motion to dismiss the CAC on July 27, 2018. On September 18, 2019, the court issued an order dismissing some, but not all, of the allegations in the CAC. On November 18, 2019, the Company and the individual defendants filed an answer to the complaint. On June 12, 2020, the lead plaintiff filed a motion for class certification. On August 11, 2020, the defendants filed a notice of non-opposition to lead plaintiff's motion for class certification. This case is currently in the discovery phase.
On August 31, 2018, a shareholder derivative action was filed against current and former members of the Company's board of directors and certain current and former officers of the Company in the United States District Court for the Southern District of New York, captioned Luis Pacheco v. David R. Guyer, et al., Case No. 1:18-cv-07999. The complaint, which is based substantially on the facts alleged in the CAC, alleges that the defendants breached their fiduciary duties to the Company and wasted the Company's corporate assets by failing to oversee the Company's business, and also alleges that the defendants were unjustly enriched as a result of the alleged conduct, including through receipt of bonuses, stock options and similar compensation from the Company, and through sales of the Company's stock between March 2, 2015 and December 12, 2016. The complaint purports to seek unspecified damages on the Company's behalf, attorneys’ fees, and other costs, as well as an order directing the Company to reform and improve its corporate governance and internal procedures to comply with applicable laws, including submitting certain proposed amendments to the Company's corporate charter, bylaws and corporate governance policies for vote by the Company's stockholders. On December 14, 2018, the Company filed a motion to dismiss the complaint. On September 19, 2019, the court denied the Company's motion to dismiss this complaint. This matter was subsequently referred to a special litigation committee of the Company's board of directors. On February 18, 2020, the Company filed an answer to the complaint. The Company and the plaintiff agreed to stay this litigation while the special litigation committee conducts its investigation.  On May 5, 2020, the court approved the stipulation and stayed the litigation through November 1, 2020. On October 30, 2020, the parties submitted a joint stipulation requesting that the court extend the stay through January 30, 2021.
On October 16, 2018, the Company’s board of directors received a shareholder demand to investigate and commence legal proceedings against certain members of the Company’s board of directors. The demand alleges facts that are substantially similar to the facts alleged in the CAC and the Pacheco complaint and asserts claims that are substantially similar to the claims asserted in the Pacheco complaint. On January 30, 2019, the Company’s board of directors received a second shareholder demand from a different shareholder to investigate and commence legal proceedings against certain current and former members of the Company’s board of directors based on allegations that are substantially similar to the allegations contained in the first demand letter. These shareholder demands have been referred to a demand review committee of the Company's board of directors. The Company has entered into tolling agreements with the directors named in the demands.
The Company denies any and all allegations of wrongdoing and intends to vigorously defend against these lawsuits. The Company is unable, however, to predict the outcome of these matters at this time. Moreover, any conclusion of these matters in a manner adverse to the Company and for which it incurs substantial costs or damages not covered by the Company's directors’ and officers’ liability insurance would have a material adverse effect on its financial condition and business. In addition, the litigation could adversely impact the Company's reputation and divert management’s attention and resources from other priorities, including the execution of its business plan and strategies that are important to the Company's ability to grow its business, any of which could have a material adverse effect on the Company's business.
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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and related notes and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2019 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2020. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties and should be read together with the "Risk Factors" section 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 science-driven biopharmaceutical company focused on the discovery and development of novel treatment options for retinal diseases with significant unmet medical needs. We are currently developing both therapeutic product candidates for age-related retinal diseases and gene therapy product candidates for orphan inherited retinal diseases, or IRDs.
    Our therapeutics portfolio consists of our clinical stage product candidate Zimura® (avacincaptad pegol), a complement C5 inhibitor, and our preclinical product candidate IC-500, a High temperature requirement A serine peptidase 1 protein, or HtrA1, inhibitor. We are currently targeting the following diseases with Zimura:
geographic atrophy, or GA, which is the advanced stage of age-related macular degeneration, or AMD, and is characterized by marked thinning or atrophy of retinal tissue, leading to irreversible loss of vision; and
autosomal recessive Stargardt disease, or STGD1, which is characterized by progressive damage to the central portion of the retina, or the macula, and other retinal tissue of young adults, leading to loss of vision.
We are developing IC-500 for GA and potentially other age-related retinal diseases.
    Our gene therapy portfolio consists of two product candidates in preclinical development (IC-100 and IC-200) and several ongoing collaborative sponsored research programs, each of which uses adeno-associated virus, or AAV, for gene delivery. These AAV mediated gene therapy programs are targeting the following orphan IRDs:
rhodopsin-mediated autosomal dominant retinitis pigmentosa, or RHO-adRP, which is characterized by progressive and severe bilateral loss of vision leading to blindness;
IRDs associated with mutations in the BEST1 gene, including Best vitelliform macular dystrophy, or Best disease, which is generally characterized by bilateral egg yolk-like lesions in the macula, which, over time, progress to atrophy and loss of vision;
Leber Congenital Amaurosis type 10, or LCA10, which is characterized by severe bilateral loss of vision at or soon after birth;
autosomal recessive Stargardt disease; and
IRDs associated with mutations in the USH2A gene, which include Usher syndrome type 2A, or Usher 2A, and USH2A-associated non-syndromic autosomal recessive retinitis pigmentosa.
We are developing IC-100 for RHO-adRP and IC-200 for BEST1-related IRDs.
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Research and Development Pipeline
    We have summarized the current status of our ongoing research and development programs in the table below. We have given an IC number to our preclinical gene therapy product candidates (IC-100 and IC-200) and to the selected product candidate from our HtrA1 inhibitor program (IC-500). In the future, we intend to give an IC number to other product candidates that advance to preclinical development, whether from our collaborative gene therapy sponsored research programs or that we may otherwise in-license or acquire, in each case, once a lead product candidate is identified for a particular program.
https://cdn.kscope.io/7ddb13d10d35e7b597a14d63fd77c9e9-opht-20200930_g1.jpg
Therapeutic Development Programs
    Zimura
    Zimura, our complement C5 inhibitor, is a chemically-synthesized, pegylated RNA aptamer. Aptamers are short molecules made up of a single stranded nucleic acid sequence or amino acid sequence that binds molecular targets with high selectivity and specificity. In April 2020, we received fast track designation from the U.S. Food and Drug Administration, or FDA, for Zimura for the treatment of GA secondary to dry AMD. The following are brief descriptions of the status of the GATHER1 trial and our ongoing clinical trials for Zimura and our manufacturing activities for Zimura.
GATHER1 (GA secondary to AMD - Completed)
GATHER1 is an international, randomized, double masked, sham controlled, multi-center Phase 3 clinical trial assessing the safety and efficacy of Zimura for the treatment of GA secondary to AMD. We enrolled 286 patients in this trial across multiple treatment groups, including various Zimura doses and sham control groups, and patients were followed for 18 months. In October 2019, we announced positive 12-month data from this trial and in June 2020, we completed this trial and announced 18-month data from this trial, which supported the 12-month data. We believe that the GATHER1 trial qualifies as the first of two Phase 3 trials typically required by the FDA for marketing approval of a pharmaceutical product.
GATHER2 (GA secondary to AMD - Ongoing)

GATHER2 is an international, randomized, double-masked, sham controlled, multi-center Phase 3 clinical trial assessing the safety and efficacy of Zimura for the treatment of GA secondary to AMD. We are continuing to recruit and enroll patients; meanwhile, we continue to monitor the COVID-19 pandemic closely and may need to slow down or stop patient enrollment in certain geographies depending on the local situation. We are also adding more countries and sites to this trial due to the ongoing and variable nature of the COVID-19 pandemic and its potential impact on patient recruitment and retention.

In this trial, we plan to enroll approximately 400 patients, who will be randomized to receive either monthly administration of Zimura 2 mg or sham during the first 12 months of the trial, at which time the primary efficacy analysis of the
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mean rate of change of GA growth over 12 months using square root transformation, which is the same as the primary efficacy endpoint we used for the GATHER1 trial, will be performed. If the 12 month results are positive, we plan to file an application with the FDA and the European Medicines Agency, or the EMA, for marketing approval of Zimura for GA. At month 12, we plan to re-randomize patients in the Zimura 2 mg arm to receive either monthly or every other month administration of Zimura 2 mg. The final evaluation will take place at month 24. We recently amended the protocol for this trial to provide that if an investigator suspects that a patient has choroidal neovascularization, or CNV, or if a patient experiences a decrease in visual acuity, as measured by a loss of more than five Early Treatment Diabetic Retinopathy Study, or ETDRS, letters, between a visit and the immediately prior visit, the independent masked reading center will confirm whether the patient has CNV using multi-modal imaging. In the event a CNV case is confirmed, the investigator will treat the CNV with one of two anti-VEGF agents, Lucentis® (ranibizumab) or Eylea® (aflibercept), in accordance with the label for that anti-VEGF agent.

OPH2005 (STGD1 - Ongoing)

OPH2005 is an international, randomized, double masked, sham controlled, multi-center clinical trial evaluating the safety and efficacy of Zimura for the treatment of STGD1. OPH2005, similar to GATHER1, was designed to be a Phase 2b screening trial, with the potential to demonstrate statistically significant results depending on the magnitude of the potential benefit observed. If the results are positive and statistically significant, we believe this trial could potentially serve as a clinical trial that can support an application for marketing approval. We initially enrolled 95 patients in the OPH2005 trial. As of September 1, 2020, all of these initially enrolled patients had completed their scheduled visits.

In July 2020, we reopened enrollment in this trial in the United States. We plan to enroll approximately 25 additional patients, with the goal of enrolling a total of approximately 120 patients. Similar to GATHER2, we continue to monitor the COVID-19 pandemic closely and may need to slow down or stop patient enrollment in certain geographies depending on the local situation. Newly enrolled patients will be randomized on a 1:1 basis to be treated with either Zimura 4 mg or sham for 18 months. We have been and plan to remain masked to the treatment condition of all patients in the trial. In addition, we have not reviewed and do not plan to review or analyze efficacy data for any patients in the trial, until the 18-month data has been collected and analyzed for all patients enrolled in the trial.

    Zimura Manufacturing
We have initiated activities for the scale-up and validation of the manufacturing process for the drug substance for Zimura. We have been continuing discussions with our existing manufacturer, Agilent Technologies, Inc., or Agilent, for scale-up and validation and other activities in preparation for potential commercialization. We have also engaged a second manufacturer, with the goal of assessing whether this manufacturer can produce Zimura drug substance at an adequate scale for future potential commercial use. Depending on these discussions with Agilent and the success of any scale-up activities by Agilent and the second manufacturer, we may use either Agilent, this second manufacturer or both for future supply of Zimura drug substance. In addition, regardless of which manufacturer we use, we will need to demonstrate that the drug substance produced through the scaled-up process is analytically comparable to the Zimura we are currently using. We are continuing analytical method development and validation work with our contract manufacturers and laboratories.
We are also exploring a potential change to the vial used for the Zimura drug product, which we believe may allow us to support a more efficient fill/finish operation at a commercial scale. We have been in discussions with our existing fill/finish manufacturer, Ajinomoto Bio-Pharma Services, or Ajinomoto, for supply of the changed vial and its capacity to supply us and/or a potential collaborator with Zimura drug product for potential commercial use. We have also engaged a second manufacturer to provide us additional supply of Zimura drug product using the existing vial configuration. This second manufacturer is in the process of making additional Zimura drug product to support our needs for the GATHER2 trial and the expanded OPH2005 trial.
We order the polyethylene glycol, or PEG, starting material used to make Zimura drug substance from a sole source third-party manufacturer. We currently procure the supply on a purchase order basis and are planning to enter into a long-term supply agreement with this manufacturer for the PEG starting material.

IC-500: HtrA1 Inhibitor
    We are pursuing the preclinical development of IC-500 for the treatment of GA secondary to AMD and potentially other age-related retinal diseases. We have selected IC-500, the lead compound from our HtrA1 inhibitor program, which includes a number of small molecule compounds that show high affinity and specificity for HtrA1 when tested. We are continuing process development and formulation development with the goal of developing a manufacturing process and a formulation for intravitreal administration in the eye. We are also planning to initiate IND-enabling studies for IC-500 if
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process development and formulation development are successful. Based on current timelines and subject to successful preclinical development and cGMP manufacturing, we plan to file an IND for IC-500 during the second half of 2021.
Gene Therapy Research and Development Programs
    IC-100: Product Candidate for RHO-adRP
    We are pursuing the preclinical development of IC-100, our novel AAV gene therapy product candidate for the treatment of RHO-adRP. We and the University of Pennsylvania, or Penn, have conducted a number of preclinical studies of IC-100 and a natural history study of RHO-adRP patients. In parallel, we have engaged a gene therapy contract development and manufacturing organization, or CDMO, as the manufacturer for preclinical and Phase 1/2 clinical supply of IC-100. We are in the process of completing cGMP manufacturing activities at our CDMO and other IND-enabling activities, including toxicology studies of IC-100. We have also begun planning for a Phase 1/2 clinical trial for IC-100, including site selection and other startup activities. Based on current timelines and subject to successful completion of preclinical development and cGMP manufacturing, we plan to file an IND for IC-100 during early 2021 with the goal of starting patient enrollment in a Phase 1/2 clinical trial during the first half of 2021.
    IC-200: Product Candidate for BEST1-Related IRDs
    We are pursuing the preclinical development of IC-200, our novel AAV gene therapy product candidate for the treatment of BEST1-related IRDs. We and Penn are conducting preclinical studies of IC-200 and natural history studies of patients with BEST1-related IRDs. In parallel, we have engaged a gene therapy CDMO as the manufacturer for preclinical and Phase 1/2 clinical supply of IC-200. We are conducting cGMP manufacturing activities at our CDMO and other IND-enabling activities, including planning for a toxicology study of IC-200. Based on current timelines and subject to successful completion of preclinical development and cGMP manufacturing, we plan to file an IND during the middle of 2021 with the goal of starting patient enrollment in a Phase 1/2 clinical trial for IC-200 during the second half of 2021.
    Minigene Programs
    AAV vectors are generally limited as a delivery vehicle by the size of their genetic cargo, which is restricted to approximately 4,700 base pairs of genetic code. The use of minigenes seeks to deliver a smaller but still functional form of a larger gene packaged into a standard-size AAV delivery vector.  The goal of minigene therapy is to deliver a gene expressing a protein that, although smaller than the naturally occurring protein, is nonetheless functional for purposes of treating the associated disease.
    We are funding several sponsored research programs at the University of Massachusetts Medical School, or UMMS, seeking to use a minigene approach to develop new gene therapies for several orphan IRDs. The following is a summary of these minigene programs and their status:
miniCEP290 (LCA10): This program, which we refer to as the miniCEP290 program, is targeting LCA10, which is associated with mutations in the CEP290 gene. In July 2019, we entered into a license agreement with the University of Massachusetts, or UMass, for exclusive development and commercialization rights to this program. The sponsored research has yielded a number of minigene constructs that show encouraging results when tested in a mouse model. UMMS is conducting additional experiments to optimize constructs, which were delayed because of restrictions placed by UMMS on animal research activities as a result of the COVID-19 pandemic. We currently expect to identify a lead construct in the fourth quarter of 2020 or early 2021.
miniABCA4 (STGD1): This program, which we refer to as the miniABCA4 program, is targeting STGD1, which is associated with mutations in the ABCA4 gene. UMMS generated and evaluated several ABCA4 minigene constructs in both in vitro and in vivo experiments, which yielded what we believe to be encouraging results. UMMS is conducting additional experiments to optimize the constructs. We expect to receive additional results from the miniABCA4 program in early 2021.
miniUSH2A (USH2A-related IRDs): This program, which we refer to as the miniUSH2A program, is targeting IRDs associated with mutations in the USH2A gene, including Usher 2A and USH2A-associated non-syndromic autosomal recessive retinitis pigmentosa. Some of the activities in this program were delayed as a result of the closure of UMMS animal research laboratories due to the COVID-19 pandemic. We expect to receive preliminary results in early 2021.
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In addition to the license agreement for the miniCEP290 program, UMMS has granted us an option to obtain an exclusive license to any patents or patent applications that result from any of these sponsored research programs.
Impact of COVID-19
    The COVID-19 pandemic and measures taken to contain it have affected our business and operations in a number of ways. These include, but are not limited to, the following:
In March 2020, we decided to delay the initiation of patient enrollment in our GATHER2 trial. Although we initiated patient enrollment in June 2020 and our clinical trial sites are continuing to enroll patients, we and our clinical trial sites are doing so cautiously in light of new health and safety practices put into place as a result of the COVID-19 pandemic. We are continuing to monitor the situation closely and may need to slow down or stop patient enrollment in certain geographies depending on the local situation. In addition, we are continuing with activating additional sites and, because of the ongoing and variable nature of the pandemic and its potential impact on patient recruitment and retention, we are adding more countries and sites to this trial. Health authorities and ethics committees in certain countries have reduced their staff and operations due to the COVID-19 pandemic. This reduction in operations has resulted in delays to the approval of our trial in certain countries outside the United States and delays in the activation process for a number of our planned clinical trial sites. Although many clinical trial sites have reopened, many are doing so with reduced staff and operations and focusing on more urgent matters rather than clinical trials. We may face difficulties in recruiting or retaining patients to the extent patients are affected by the virus or are fearful of visiting or traveling to our clinical trial sites because of the pandemic. At this time, we do not know whether there will be further impacts on the timing and progress of patient enrollment or on patient retention in the GATHER2 trial as a result of the COVID-19 pandemic. We may face similar issues with patient recruitment and patient retention for the expansion of the OPH2005 trial.

Most of our clinical trial sites, even though they are operating with fewer staff and other restrictions, have continued to conduct patient visits for our clinical trials. We are engaging with our clinical trial sites, with the goal of monitoring the health and well-being of our patients who remain in our trials and maintaining their scheduled visits and treatments. Where possible, we and our clinical investigators have instituted practices such as flexible scheduling of visits for patients and remote monitoring, and we have also provided personal protective equipment to support our sites. We are aware that a small number of patients enrolled in the OPH2005 trial missed consecutive visits during the pandemic. We do not yet know whether the number of missed visits will increase or decrease in the OPH2005 trial or how many missed visits will occur in the GATHER2 trial, or what the impact of missed visits may be on trial results, especially because we are masked to the treatment of patients during the conduct of the trials. We have been and will continue to monitor the situation closely.

We instituted company-wide remote working starting in the middle of March 2020 and expect to continue working remotely for the foreseeable future. Investor and scientific meetings and conferences have been canceled or are occurring virtually. We have been relying on remote means of working and communication both internally and externally. We are continuing to monitor and support the health and well-being of our employees and their productivity as remote working continues.

In some instances, our third-party contract manufacturers, academic research collaborators and contract research organizations have limited their operations and staff, which has resulted in delays to some of our manufacturing and research and development activities and limited our ability to be on site to oversee these activities. For example, the closure of animal research laboratories at the UMMS caused delays to the progress of, and to our timelines for receipt of data from, our collaborative gene therapy sponsored research programs.

Shortages and governmental restrictions arising from the COVID-19 pandemic have disrupted and may continue to disrupt the ability of our contract manufacturers to procure items, such as raw materials, that are essential for the manufacture of our product candidates. For example, our contract manufacturer for IC-500 experienced a shortage in obtaining one of the critical raw materials that was sourced from China, which was caused by the shutdown of local suppliers and the slowdown in trade due to the COVID-19 pandemic. This shortage delayed our process development activities for the drug substance for IC-500 by a number of months. Additionally, there is increased demand for the vials we are considering using for the fill/finish of Zimura drug product, which governments and other companies intend to use for COVID-19 vaccines and medicines. This increased demand may limit our ability to obtain these vials for our own needs.

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The pandemic has caused significant disruption to the financial markets, and has caused increased volatility in the price of our stock and that of other companies in the biotechnology industry.

    We do not believe that the COVID-19 pandemic, and our actions in response and the costs of those actions, have had a material impact on our financial position, results of operations, or cash flows for the three or nine months ended September 30, 2020. The progression of the COVID-19 pandemic remains fluid and its impact on our business and operations remains uncertain. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or lessen its impact and the economic impact on local, regional, national and international markets. If the delays and other disruptions due to the pandemic become prolonged or more extensive, then we may experience further delays or disruptions to our research and development programs and our financial position, results of operations or cash flows for future periods may be materially affected.
    For further information on actual and potential impacts to us as a result of the COVID-19 pandemic, see the other sections of this Management's Discussion and Analysis of Results of Operations and Financial Position and the Risk Factors contained in this Quarterly Report on Form 10-Q.
Business Development and Financing Activities
    As we continue the development of our product candidates and programs and evaluate our overall strategic priorities, we will continue to pursue selective business development and financing opportunities that advance us toward our strategic goals. We have been, and plan to continue, exploring options for the future development and potential commercialization of Zimura, including potential collaboration and out-licensing opportunities, including for indications for which we previously developed Zimura such as wet AMD and IPCV. In addition, we expect to continue to evaluate, on a selective and targeted basis, opportunities to potentially obtain rights to additional product candidates and technologies for retinal diseases, including technologies that may complement our existing product candidates and other strategic lifecycle initiatives.
In June 2020, we closed an underwritten public offering in which we sold 28,503,220 shares of our common stock, which includes the exercise in full of the underwriters’ option to purchase additional shares of our common stock, at a price to the public of $4.10 per share, and at a price to the underwriters of $3.854 per share. We also sold to certain investors in lieu of common stock, pre-funded warrants to purchase 1,914,280 shares of our common stock at a price to the public of $4.099 per share underlying each pre-funded warrant, and at a price to the underwriters of $3.853 per share underlying each pre-funded warrant.
Concurrently with the June 2020 public offering, we completed a private placement exempt from the registration requirements of the Securities Act of 1933, as amended, in which we sold 8,649,453 shares of our common stock to affiliates of Vivo Capital, LLC and Samsara BioCapital, LP, or the Private Placement Purchasers, at a purchase price equal to $4.10 per share, the price to the public in the public offering. The shares in the private placement were issued pursuant to a stock purchase agreement entered into among us and the Private Placement Purchasers.
The net proceeds from the public offering and private placement, after deducting underwriting discounts, placement agent fees and other offering expenses of approximately $10.1 million, was approximately $150.1 million.
We expect to continue to pursue capital raising transactions opportunistically when they are available and if the opportunity benefits us and advances our strategic goals.

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Financial Matters
    As of September 30, 2020, we had cash, cash equivalents and available for sale securities of $231.1 million. We estimate that our year-end 2020 cash, cash equivalents and available for sale securities will range between $210 million and $215 million, which reflects the impact of a $6.0 million milestone payment to Archemix. We also estimate that our cash, cash equivalents and available for sale securities will be sufficient to fund our currently planned capital expenditure requirements and operating expenses, excluding any potential approval or sales milestones payable to Archemix or any commercialization expenses for Zimura, through at least mid-2024. These estimates are based on our current business plan, which includes the continuation of our ongoing clinical development programs for Zimura, the progression of our IC-100 and IC-200 programs into the clinic, and the advancement of our IC-500 development program. These estimates also assume that we will enroll approximately 400 patients in the GATHER2 trial. These estimates do not reflect any additional expenditures related to potentially studying Zimura in other indications, or resulting from the potential in-licensing or acquisition of additional product candidates or technologies, commencement of any new sponsored research programs or any associated development we may pursue. We have based these estimates on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.
Financial Operations Overview
Revenue
As we have no products approved for sale, we do not expect to receive any revenue related to our product candidates until we obtain regulatory approval for and commercialize such products, or until we potentially enter into agreements with third parties for the development and commercialization of our product candidates. If our development efforts for any of our product candidates result in regulatory approval or if we enter into agreements with third parties, including for any collaborations or outlicensing of rights for further development and potential commercialization of Zimura, we may generate revenue from product sales or from such third parties.
Our ability to become and remain profitable depends on our ability to generate revenues in excess of our expenses. Our ability to generate revenues from product sales is dependent on our obtaining marketing approval for and commercializing our product candidates or any product candidates we may in-license or acquire. We may be unsuccessful in our efforts to develop and commercialize product candidates or in our efforts to in-license or acquire additional product candidates. Even if we succeed in developing and commercializing one or more of our product candidates, we may never achieve sufficient sales revenue to achieve or maintain profitability.
Research and Development Expenses
Our research and development expenses primarily consist of costs associated with the manufacturing, development, and preclinical and clinical testing of our product candidates and costs associated with our collaborative gene therapy sponsored research programs. Our research and development expenses consist of:
external research and development expenses incurred under arrangements with third parties, such as academic research collaborators, contract research organizations, or CROs, and CDMOs and other vendors for the production and analysis of drug substance and drug product; and
employee-related expenses for employees dedicated to research and development activities, including salaries, benefits and share-based compensation expense.
Research and development expenses also include costs of acquired product licenses, in-process research and development, and related technology rights where there is no alternative future use, costs of prototypes used in research and development, consultant fees and amounts paid to collaborators.
All research and development expenses are charged to operations as incurred in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 730, Research and Development, or ASC 730. We account for non-refundable advance payments for goods and services that will be used in future research and development activities as expenses when the service has been performed or when the goods have been received, rather than when the payment is made. We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis because we record expenses by functional department. Accordingly, we do not allocate all research and development expenses to individual projects or product candidates, although we do allocate some portion of these expenses by project or product candidate, as shown below.
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The following table summarizes our research and development expenses for the three and nine months ended September 30, 2020 and 2019:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (in thousands)
Zimura$10,640 $2,826 $19,616 $9,805 
IC500: HtrA1280 150 1,098 382 
IC-100: RHO-adRP2,920 1,992 7,328 4,617 
IC 200:BEST11,361 1,941 4,877 3,224 
Other gene therapy56 447 920 886 
Prior product candidate Fovista(792)11 (754)40 
Personnel-related3,330 1,720 8,783 5,024 
Share-based compensation882 942 2,986 3,101 
Other164 354 457 998 
$18,841 $10,383 $45,311 $28,077 
As we continue our ongoing clinical trials and our manufacturing activities for Zimura, we expect our research and development expenses for Zimura to increase. We also expect our research and development expenses for each of IC-100, IC-200 and IC-500 to increase as development continues. We expect our research and development expenses for our miniCEP290 program and other collaborative gene therapy sponsored research programs to decrease as the sponsored research for those programs reaches completion. Our research and development expenses may also increase if we in-license or acquire any new product candidates, including from our collaborative gene therapy sponsored research programs, or technologies or commence any new sponsored research programs.
The successful development of our product candidates is subject to numerous risks and uncertainties associated with developing drugs, including the uncertainty of:
the scope, rate of progress and costs of our research and development activities, including manufacturing activities;
the potential benefits of ou