Company: OCEA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011080
Chunk: 111

Company: Ocean Biomedical, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 111
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37

Operating Expenses

Research and Development Expenses

To date, research and development
expenses consist, or will consist, primarily of costs incurred for our research activities, including the development of our product candidates,
as well as stock-based compensation. We expense research and development costs as incurred, which we expect will primarily include:

    ●
    expenses incurred under our licenses and services agreements;

    ●
    employee-related expenses, including salaries and benefits for personnel engaged in research and development functions; and

    ●
    expenses incurred for outside services with our CMO relating to the development of certain of our preclinical assets.

We recognize external development
costs based on an evaluation of the progress to completion of specific milestones using information provided to us by our service providers.
This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been
performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not
yet been invoiced or otherwise notified of actual costs. Such amounts are expensed as the related goods are delivered or the related services
are performed, or until it is no longer expected that the goods will be delivered, or the services rendered.

Our direct external research
and development expenses consist of (or are expected to consist) primarily of external costs, such as fees paid to outside consultants,
CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development
activities. Our direct research and development expenses also include fees incurred under license agreements. We have not allocated and
do not expect to allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including
depreciation or other indirect costs, to specific programs because these costs are or will be deployed across multiple programs and, as
such, are not separately classified. We use internal resources primarily to conduct our research and discovery as well as for managing
our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple
programs and, therefore, we do not track their costs by program.

Research and development activities
are key to our business model. Product candidates in later stages of clinical development generally have higher development costs than
those in earlier stages of clinical development, primarily due to the increased size and duration of later stage clinical trials. As a
result, we expect that our research and development expenses will increase substantially over the next several years, which will include:

    ●