to the Form 8-K of Ocugen, Inc. (previously known as Histogeniccs) filed with the Securities and Exchange Commission (the SEC ) on

MANAGEMENT S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As of June 30, 2019 and for the three and six month periods ended June 30, 2019 and 2018

On September 27, 2019, Histogenics Corporation ( Histogenics ) completed its business combination with the Delaware corporation that was previously known as Ocugen, Inc. in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of April 5, 2019, by and among the Company, Ocugen, Inc., a Delaware corporation ( Ocugen ), and Restore Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Histogenics ( Merger Sub ), as amended (the Merger Agreement ), pursuant to which Merger Sub merged with and into Ocugen, with Ocugen surviving as a wholly owned subsidiary of Histogenics (the Merger ). Immediately after completion of the Merger, Histogenics changed its name to Ocugen, Inc. and the business conducted by Histogenics became the business conducted by Ocugen, Inc.

You should read the following discussion and analysis of financial condition and results of operations of Ocugen together with Ocugen s condensed consolidated financial statements as of June 30, 2019 and for the three and six month periods ended June 30, 2019 and 2018 and related notes appearing as Exhibit 99.2 to the Form 8-K of Ocugen, Inc. (previously known as Histogeniccs) filed with the Securities and Exchange Commission (the SEC ) on September 30, 2019, and Histogenics s Registration Statement on Form S-4 (Reg. No. 333-232417), as amended (the Registration Statement ), filed with the SEC. Capitalized terms not defined herein shall have the meaning as defined in the Registration Statement.

Ocugen is a clinical stage biopharmaceutical company focused on discovering, developing and commercializing a pipeline of innovative therapies, including gene therapies and biologicals, to address rare and underserved eye diseases.

Ocugen is developing a modifier gene therapy platform for unmet medical needs in the area of retinal diseases, including inherited retinal diseases ( IRDs ). Ocugen s modifier gene therapy platform is novel in that it targets nuclear hormone receptor ( NHR ) genes that have the potential to restore homeostasis to the retina and may target multiple genes that are associated with a range of IRDs. Unlike single-gene replacement therapies, which only target one genetic mutation, Ocugen believes that its gene therapy platform, through its use of NHRs, may impact multiple genes that are associated with a range of genetically diverse diseases. Ocugen s first gene therapy candidate, OCU400 received Orphan Drug Designation ( ODD ), from the Food and Drug Administration (the FDA ), for the treatment of NR2E3 mutation-associated retinal degenerative disease. OCU400 uses an adeno-associated virus vector. Ocugen is planning to initiate a Phase 1/2a clinical trial for OCU400 in the next two years.

Ocugen has a late-stage, Phase 3 program, OCU300, that also has received ODD from the FDA. OCU300 is a small molecule therapeutic currently in Phase 3 clinical development for patients with ocular graft-versus-host disease ( oGVHD ). Ocugen is the first and only company to receive ODD for the treatment of oGVHD. Ocugen estimates the current prevalence of patients suffering from oGVHD in the United States to be approximately 50,000. The final manufacturing processes for OCU300 has been scaled up by Ocugen s existing contract manufacturer at a cGMP facility located in the United States to support potential commercialization, and chemistry, manufacturing and control ( CMC ) development is ongoing.

OCU300 is formulated using Ocugen s proprietary nanoemulsion technology, OcuNanoE Ocugen s ONE Platform ( OcuNanoE ). Ocugen is the first and only company to use nanoemulsion technology in the ophthalmology space, and Ocugen believes that OcuNanoE provides additional protection to the ocular surface. Ocugen s technology delivers the active drug with the use of defined narrow-range globules with an average diameter of less than 100 nanometers. Ocugen believes this provides the potential for enhanced efficacy compared to traditional formulations.

Ocugen is developing OCU310 for patients with dry eye disease ( DED ), which is also formulated using OcuNanoE . Ocugen has completed a Phase 3 clinical trial for OCU310 that was initiated in September 2018 with the first patient dosed in December 2018. Although the study showed that OCU310 is well-tolerated, as demonstrated by no adverse events regarded as severe, it did not meet its co-primary endpoints for symptom and sign. However, a pre-specified exploratory efficacy endpoint of reduction in redness (sign) from the baseline visit, measured by a Validated Bulbar Redness score, was significantly better for OCU310 relative to placebo at both Day 14 and Day 28. Post-hoc analysis of the Phase 3 clinical trial is ongoing, subsequent to which a consultation with the FDA will be sought. Ocugen is evaluating its options and timing for the continued development of OCU310, including partnering for future clinical trials.

Ocugen is developing OCU200, a novel fusion protein, that is currently in preclinical development for treating wet age-related macular degeneration ( wet AMD ). Ocugen expects to initiate a Phase 1/2 clinical trial for OCU200

within the next two years. In addition, Ocugen plans to expand the therapeutic applications of OCU200 beyond wet AMD to potentially include diabetic retinopathy ( DR ), diabetic macular edema ( DME ), macular edema following retinal vein occlusion ( RVO ), and myopic choroidal neovascularization ( mCNV ). Ocugen s novel biologic, OCU100 for the treatment of retinitis pigmentosa ( RP ) has received ODD in the United States and the European Union.

To date, Ocugen has viewed its operations and manages its business as one operating segment. As of June 30, 2019, all of Ocugen s assets were located in the United States. Its headquarters and operations are located in Malvern, Pennsylvania.

Development Stage Company

Ocugen is a development stage company, and it has no products approved for sale. As a result, Ocugen has not generated any revenue to date and has primarily funded its operations to date through the sale of common stock, warrants to purchase common stock, the issuance of convertible notes, and debt. Specifically, since Ocugen s inception and through June 30, 2019, it has raised an aggregate of $27.7 million to fund its operations, of which $14.4 million was from the sale of Ocugen common stock and warrants, $12.0 million was from convertible notes, $1.0 million was from borrowings under the U.S. Government s Immigrant Investor Program, commonly known as the EB-5 program (the EB-5 Program ) and $0.2 million was from a research grant from the state of Colorado. As of June 30, 2019, Ocugen had a cash and cash equivalents balance of $0.7 million.

Since Ocugen s inception, it has devoted substantial resources to research and development and has incurred significant net losses and expects to continue to incur net losses for the foreseeable future. Ocugen incurred net losses of approximately $9.9 million and $10.3 million for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, Ocugen had an accumulated deficit of $41.1 million.

Ocugen s ability to generate revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of its product candidates, which is subject to significant uncertainty. Ocugen expects that over the next several years it will continue to incur losses from operations as it increases its expenditures in research and development in connection with clinical trials and other development activities. If adequate funds are not available to Ocugen on a timely basis, or at all, Ocugen may be required to terminate or delay certain development activities.

Ocugen believes that the net proceeds from the Pre-Merger Financing and the Asset Sale, together with the existing cash and cash equivalents of the combined company, will be sufficient to fund its operations into mid-2020, during which time Ocugen expects to continue its development efforts with respect to its product candidates. However, Ocugen will need to raise additional capital in the future to further the development and commercialization of its other product candidates. Until such time, if ever, as Ocugen generates product revenue, Ocugen expects to obtain additional financing through the issuance of its common stock, through other equity or debt financings or through collaborations or partnerships with other companies. Ocugen may not be able to raise additional capital on terms acceptable to it, or at all, and any failure to raise capital as and when needed could compromise its ability to execute on its business plan and cause it to delay or curtail its operations until such funding is received.

Financial Operations Overview

Ocugen has not generated revenue from the sale of any products, and it does not expect to generate revenue unless or until it obtains regulatory approval of and commercializes one or more of its product candidates.

Research and development expense

Research and development costs are expensed as incurred. These costs consist of internal and external expenses. Internal expenses include the cost of salaries, benefits and other related costs, including stock-based compensation, for personnel serving in Ocugen s product development functions, as well as allocated rent and utilities expenses. External expenses include development, clinical trials, patent costs and regulatory compliance costs incurred with

research organizations and other third-party vendors. License fees paid to acquire access to proprietary technology are expensed to research and development unless it is determined that the technology is expected to have an alternative future use. All patent related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred to research and development expense due to the uncertainty about the recovery of the expenditure. Ocugen records costs for certain development activities, such as clinical trials, based on its evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to Ocugen by Ocugen s vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued research and development expense, as the case may be.

Ocugen plans to incur research and development expenses for the foreseeable future as it expects to seek to continue development and eventual commercialization of one or more of its product candidates. At this time, due to the inherently unpredictable nature of preclinical and clinical development, Ocugen is unable to estimate with any certainty the costs it will incur and the timelines it will require in its continued development efforts.

As a result of the uncertainties discussed above, successful development and completion of clinical trials is uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each future product candidate and are difficult to predict. Ocugen will continue to make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to its ability to enter into collaborations with respect to each product candidate, the scientific and clinical success of each product candidate as well as ongoing assessments as to the commercial potential of product candidates. Ocugen may seek to obtain additional financing in the future through the issuance of its common stock, through other equity or debt financings or through collaborations or partnerships with other companies. Ocugen may not be able to raise additional capital on terms acceptable to it, or at all, and any failure to raise capital as and when needed could compromise Ocugen s ability to execute on its business plan and cause it to delay or curtail its operations until such funding is received.

General and administrative expense

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

Ocugen anticipates that its general and administrative expense will increase as a result of an expanded infrastructure and an increased headcount. Ocugen anticipates higher corporate infrastructure costs including, but not limited to accounting, legal, human resources, consulting and investor relations fees, as well as increased director and officer insurance premiums, associated with becoming a public company. Additionally, if and when Ocugen believes a regulatory approval of a product candidate appears likely, it anticipates an increase in payroll and expense as a result of its preparation for commercial operations, especially as it relates to the sales and marketing of its product candidates.

Change in fair value of derivative liabilities

Change in fair value of derivative liabilities represents the change in fair value each reporting period of the embedded conversion features and embedded change in control features required to be bifurcated from certain of the outstanding convertible promissory notes.

Other income (expense)

Other income (expense) consists primarily of interest expense, the amortization of debt issuance costs related to Ocugen s debt and accretion of the discount created by the bifurcation of the embedded conversion features and embedded change in control features from certain of the convertible promissory notes, interest earned on Ocugen s cash and cash equivalents held with institutional banks, as well as foreign currency income (losses) due to exchange rate fluctuations on transactions denominated in a currency other than its functional currency.

Critical Accounting Policies and Significant Judgments and Estimates

Ocugen s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of Ocugen s financial statements requires it to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reported period. Ocugen bases its estimates on historical experience, known trends and events and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Ocugen evaluates its estimates and assumptions on an ongoing basis. Ocugen s actual results may differ from these estimates under different assumptions and conditions.

While Ocugen s significant accounting policies are described in more detail in the notes to its consolidated financial statements appearing elsewhere in this proxy statement/prospectus/information statement, Ocugen believes that the following accounting policies and estimates are those most critical to the preparation of its consolidated financial statements.

Research and development expenses

Research and development costs are expensed as incurred and consist of internal and external expenses. Internal expenses include employee compensation, benefits and certain overhead such as rent and utilities. External expenses include development, clinical trials, patent costs and regulatory compliance costs incurred with research organizations and other third-party vendors.

Ocugen records costs for certain development activities, such as clinical trials, based on its evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to Ocugen by its vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued research and development expense, as the case may be.

Ocugen records income taxes in accordance with Financial Accounting Standards Board ( FASB ) Accounting Standards Codifications ( ASC ) Topic 740, Income Taxes ( ASC 740 ), which provides for deferred taxes using an asset and liability approach. Ocugen recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Ocugen accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, Ocugen recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of June 30, 2019 and December 31, 2018, Ocugen did not have any uncertain tax positions.

Ocugen has incurred substantial losses during its history. Ocugen does not anticipate generating revenue from sales of products for the foreseeable future, if ever, and it may never achieve profitability. To the extent that Ocugen continues to generate tax losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire. Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an ownership change, which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. Ocugen has not completed its analysis to determine what, if any, impact any prior ownership change has had on its ability to utilize its net operating loss carryforwards. In addition, Ocugen may experience ownership changes in the future as a result of subsequent shifts in its stock ownership, such as in connection with the merger or the Pre-Merger Financing. As of December 31, 2018, Ocugen had federal net operating loss carryforwards of approximately $23.7 million that could be limited if Ocugen has experienced, or if in the future it experiences, an ownership change. As of June 30, 2019, Ocugen had recorded a full valuation allowance against these loss carryforwards.

Stock-based compensation

Ocugen accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation-Stock Compensation ( ASC 718 ). ASC 718 requires all stock-based payments to employees, including grants of employee stock options and restricted stock units and modifications to existing agreements, to be recognized in the statements of operations based on their fair values. Ocugen uses the Black-Scholes option-pricing model to determine the fair value of options granted.

Ocugen s stock-based awards are subject to either service or performance-based vesting conditions. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Compensation expense related to awards to employees with performance-based vesting conditions is recognized based on the grant date fair value over the requisite service period to the extent achievement of the performance condition is probable.

Estimating the fair value of options requires the input of subjective assumptions, including the estimated fair value of Ocugen common stock, the expected life of the option, stock price volatility, the risk-free interest rate and expected dividends. The assumptions used in Ocugen s Black-Scholes option-pricing model represent management s best estimates and involve a number of variables, uncertainties and assumptions and the application of management s judgment, as they are inherently subjective. If any assumptions change, Ocugen s stock-based compensation expense could be materially different in the future.

These assumptions used in Ocugen s Black-Scholes option-pricing model are as follows:

Expected Term. Due to the lack of a public market for the trading of Ocugen common stock and the lack of sufficient company-specific historical data, the expected term of employee options is determined using the simplified method, as prescribed in SEC s Staff Accounting Bulletin ( SAB No. 107 ), whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option. The expected term of non-employee options is equal to the contractual term.

Expected Volatility. The expected volatility is based on historical volatilities of similar entities within Ocugen s industry which were commensurate with the expected term assumption as described in SAB No. 107.

Risk-Free Interest Rate. The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term.

Expected Dividends. The expected dividend yield is 0% because Ocugen has not historically paid, and do not expect for the foreseeable future to pay, a dividend on its common stock.

The following table reflects the assumptions used to estimate the fair value of options granted during the periods presented.

Stock-based compensation expense was $0.1 million and $0.3 million for the three months ended June 30, 2019 and 2018, respectively, and $0.5 million for the six months ended June 30, 2019 and 2018, respectively. At June 30, 2019, Ocugen had $1.3 million of unamortized stock-based compensation expense related to unvested service-based stock options, which is expected to be recognized over a remaining weighted-average vesting period of 1.6 years. Ocugen expects the impact of its stock-based compensation expense for stock options granted to employees and non-employees to increase in future periods due to the potential increases in the value of its common stock and in headcount.

Valuation of common stock

As there has been no public market for Ocugen common stock to date, the estimated fair value of its common stock has been determined by the Ocugen Board as of the date of each option grant and quarter end, with input from management, considering Ocugen s most recently available third-party valuations of common stock. These factors include, but are not limited to:

Ocugen s most recently available valuations of its common stock by an unrelated third party;

the price at which Ocugen sold shares of its common stock to outside investors in arms-length transactions;

Ocugen s results of operations, financial position and capital resources;

current business conditions and projections;

the lack of marketability of Ocugen common stock;

the hiring of key personnel and the experience of management;

the risk inherent in the development of Ocugen s products;

Ocugen s stage of development and material risks related to its business;

the fact that the option grants involve illiquid securities in a private company; and

the likelihood of achieving a liquidity event, such as an initial public offering or sale, in light of prevailing market conditions.

Ocugen has periodically determined the estimated fair value of its common stock at various dates using contemporaneous valuations performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the Practice Aid. The Practice Aid identifies various available methods for allocating enterprise value across classes and series of capital stock to determine the estimated fair value of common stock at each valuation date. In accordance with the Practice Aid, the Ocugen Board considered the following methods:

Current Value Method. Under the Current Value Method, or CVM, Ocugen s value is determined based on its balance sheet. This value is then first allocated based on the liquidation preference associated with preferred stock issued as of the valuation date, and then any residual value is assigned to the common stock.

Option-Pricing Method. Under the option-pricing method, or OPM, shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The estimated fair values of the preferred and common stock are inferred by analyzing these options.

Probability-Weighted Expected Return Method. The probability-weighted expected return method, or PWERM, is a scenario-based analysis that estimates value per share based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to Ocugen, as well as the economic and control rights of each share class.

Based on Ocugen s early stage of development and other relevant factors, Ocugen determined that a PWERM was the most appropriate method for allocating its enterprise value to determine the estimated fair value of its common stock. Ocugen common stock valuation as of June 30, 2019 was prepared using the PWERM.

The Ocugen Board and management develop best estimates based on application of these approaches and the assumptions underlying these valuations, giving careful consideration to the advice from Ocugen s third-party valuation expert. Such estimates involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and Ocugen uses significantly different assumptions or estimates, Ocugen s equity-based compensation could be materially different.

Following the closing of the merger, the Ocugen Board will determine the fair market value of Ocugen common stock based on its closing price as reported on the date of grant on the primary stock exchange on which Ocugen common stock is traded.

Ocugen accounts for its warrants, all issued prior to December 31, 2017, as equity instruments. Ocugen estimated their fair value in the same manner as Ocugen s stock options using the Black-Scholes model, and the valuation assumptions are similar to those used in estimating the fair value of Ocugen s stock options.

Derivative liabilities

The derivative liabilities are embedded conversion features bifurcated from Ocugen s convertible promissory notes because the number of common shares to be issued upon conversion is variable and embedded change in control features because it represents a redemption feature not clearly and closely related to the debt host. Ocugen estimated the fair value of the embedded conversion, redemption and change in control features at each issuance of convertible promissory notes and at the end of each reporting period using an income approach model. Inputs into this model include the expected time until conversion or change in control and Ocugen s estimate of the probability of conversion or change in control occurring.

Results of Operations

Comparison of the Three Months Ended June 30, 2019 and June 30, 2018

The following table summarizes the results of Ocugen s operations for the three months ended June 30, 2019 and 2018:

Research and development expenseResearch and development expense decreased by $1.6 million for the three months ended June 30, 2019 when compared to the three months ended June 30, 2018 primarily as a result of a net decrease of $1.3 million in clinical trial activities and a decrease of $0.3 million in other costs. Specifically, the OCU300 trial was well into Phase III by the second quarter of 2019 causing a $0.7 million decrease in pre-clinical and manufacturing costs. The OCU310 trial was completed in the first quarter of 2019 causing a $0.4 million decrease in year-over-year clinical costs. The $0.2 decrease is attributed to minimal activity in the OCU100 and OCU200 trials and reduced amount of patient activity within the OCU300 trial in 2019. The decrease of $0.3 million is attributable to decrease in R&D headcount to 10 full-time employees at June 30, 2019 from 13 at June 30, 2018, resulting in decreased employee benefits and wage and salaries expenses totaling $0.1 million. The remaining decrease is attributable to a minimization of expenses primarily related to patent work and employee travel.

General and administrative expense

General and administrative expenses remained relatively flat for the three months ended June 30, 2019 when compared to the three months ended June 30, 2018. This was primarily due to a $0.6 million increase in accounting and legal fees related to the S-4 filing. As an offset, a) stock-based compensation expense decreased by $0.2 million for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, due to reduced headcount, b) a decrease of $0.2 million resulting from severance payments, and c) G&A headcount decreased to 3 fulltime employees at June 30, 2019 from 7 at June 30, 2018, resulting in decreased employee benefits and wage and salaries expenses totaling $0.1 million.

Change in fair value of derivative liability

The change in fair value of derivative liability was loss of $0.6 million for the three months ended June 30, 2019 compared to a loss of $0.1 million for the three months ended June 30, 2018. This loss relates to the remeasurement of embedded features on the convertible notes which were issued during fiscal year 2018, the first, and the second quarter of 2019. All previous convertible debt, as discussed below, was converted during the quarter.

Loss on debt conversion

The loss on debt conversion of $0.3 million primarily relates to the April 4, 2019 conversion of all previously issued convertible debt.

Interest income was $377 for the three months ended June 30, 2019 compared to $6,200 for the three months ended June 30, 2018. This relates to interest earned on cash and cash equivalents and lower cash balances in 2019 when compared to 2018.

Interest expense was $0.3 million for the three months ended June 30, 2019 compared to $1.2 million for the three months ended June 30, 2018. The decreased expense is primarily due to conversion of the convertible debt on during the second quarter of 2019.

Other expense was $183 for the three months ended June 30, 2019 compared to $1,762 for the three months ended June 30, 2018. The second quarter of 2019 and 2018 expense relates to foreign exchange revaluations for Ocugen s Irish subsidiary, with minimal activity with the Irish subsidiary taking place during 2019.

Comparison of the Six Months Ended June 30, 2019 and 2018

The following table summarizes the results of Ocugen s operations for the six months ended June 30, 2019 and June 30, 2018:

Research and development expense

Research and development ( R&D ) expense decreased by $0.8 million for the six months ended June 30, 2019 when compared to the six months ended June 30, 2018 primarily as a result of a net decrease in program development and clinical trial activities of $0.4 million and a decrease of $0.4 million in other costs. Specifically, OCU310 clinical trial activities increased in 2019 by $2.0 million due to the wrap-up of the Phase III trial. This

increase was offset by $2.4 million of decreases in pre-clinical and manufacturing activities within OCU100, OCU200, and OCU300. In addition, R&D headcount decreased to 10 full-time employees at June 30, 2019 from 13 at June 30, 2018, resulting in decreased bonuses and wage and salaries expenses totaling $0.2 million. The remaining $0.2 million decrease is attributable to a minimization of overall expenses primarily related to patent work, and employee travel.

General and administrative expense

General and administrative expenses ( G&A ) remained relatively flat for the six months ended June 30, 2019 when compared to the six months ended June 30, 2018. This was primarily due to a $0.6 million increase in accounting and legal fees related to the S-4 filing in the second quarter of 2019. As an offset, a) G&A headcount decreased to 3 full-time employees at June 30, 2019 from 7 at June 30, 2018, resulting in decreased employee benefits and wages and salaries of $0.2 million, b) a decrease of $0.2 million resulting from severance payments, c) the remaining $0.2 million decrease is attributable to a minimization of overall expenses primarily related to marketing and employee travel.

Change in fair value of derivative liability

The change in fair value of derivative liability increased the loss by $1.1 million for the six months ended June 30, 2019 when compared to the six months ended June 30, 2018. This increase relates to the remeasurement of embedded features on the convertible notes which were issued during 2018 and 2019.