Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited financial statements and notes included in Part
I “Financial Information”, Item I “Financial Statements” of this Quarterly Report on Form 10-Q (the “Report”) and the audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31,
2022.
Forward-Looking Statements
Certain statements contained in this Report are not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance. We
may, in some cases, use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “we expect,” “we anticipate,” “would” or the negative of those terms, and
similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements.
These forward-looking statements reflect our management’s beliefs and views with respect to future events, are based on estimates and assumptions as of the date of this Report and are subject to
risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in these forward-looking statements. We discuss many of these risks in greater detail under Part I, Item 1A “Risk
Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent reports filed with or furnished to the Securities and Exchange Commission (the “SEC”). Moreover, we operate in a very competitive and rapidly changing
environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
Any forward-looking statement made by us in this Report speaks only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable laws or regulations.
Overview
We are a clinical-stage ophthalmic biopharmaceutical company focused on developing novel therapies for the treatment of unmet needs of patients with retinal and
refractive eye disorders.
APX3330
Our lead retinal product candidate, APX3330, is a first-in-class small-molecule inhibitor of Ref-1 (reduction oxidation effector factor-1 protein). Ref-1 is a regulator of
transcriptor factors such as HIF-1α and NF-kB. Inhibiting REF-1 reduces levels of vascular endothelial growth factor (VEGF) and inflammatory cytokines which are known to play key roles in ocular angiogenesis and inflammation. Through inhibition
of Ref-1, APX3330 normalizes the levels of VEGF to physiologic levels, unlike biologics that abolish the VEGF levels required for normal function. APX3330 is an oral tablet administered twice per day for the treatment of diabetic retinopathy
(“DR”) and diabetic macular edema (“DME”).
DR affects approximately 10 million people with diabetes and is projected to impact 14.6 million Americans by 2050. DR is
classified as Non-Proliferative Diabetic Retinopathy (“NPDR”), the early stage of the disease in which symptoms may be mild or nonexistent or Proliferative Diabetic Retinopathy (“PDR”) which is the more advanced stage of diabetic eye
disease that can be highly symptomatic with loss of vision. Approximately 80% of the DR patients have NPDR that will progress to PDR if left untreated. Despite the risk for visual loss associated with this disease, over 90% of NPDR patients
currently receive no course of treatment apart from observation by their eye care specialist until they develop sight-threatening complications. This is due to the burdensome and frequent eye injections currently required with currently
approved therapies for this disease. APX3330 as an oral tablet has the potential to be an early, non-invasive treatment for the 8 million NPDR patients in the US.
In January 2023, we reported top-line efficacy and safety results from the ZETA-1 Phase 2 trial conducted in 103 subjects (51 treated with 600 mg daily dose of APX3330) in DR, including
moderately severe non-proliferative DR (“NPDR”) and mild proliferative DR (“PDR”), as well as patients with DME without loss of central vision. Although administration of APX3330 daily did not meet the study’s primary endpoint of % of patients
with a ≥ 2-step improvement in Early Treatment of Diabetic Retinopathy Study (“ETDRS”) diabetic retinopathy severity scale (“DRSS”) in the study eye at week 24 compared to placebo, statistical significance was achieved on a key pre-specified
secondary endpoint of preventing clinically meaningful progression of diabetic retinopathy (defined by binocular 3 or more steps worsening on the DRSS scale, calculated as the sum of the change in DRSS in the study eye and fellow eye) after 24
weeks of treatment. Given the systemic delivery of APX3330, an endpoint that evaluates the effects on both eyes is a potential FDA registration endpoint for future trials. The binocular ≥3-step worsening in DRSS endpoint will be confirmed at an
End-of-Phase 2 (“EOP2”) meeting with the FDA in the fourth quarter of 2023.
Prior to Ocuphire in-licensing the APX3330 product candidate, it had been studied by other sponsors in a total of 11 clinical trials (6 Phase 1 and 5 Phase 2) in a total of over 420 healthy
volunteers or patients (with over 340 APX3330-treated) for inflammatory (hepatic) and oncology indications, and had demonstrated evidence of target engagement, consistent pharmacokinetics, durability, and favorable safety and tolerability.
Treatment-related adverse events were uncommon, and most were mild in severity. No clinically significant changes were observed in liver, kidney, or heart function. There were no treatment-related effects on hematologic or blood chemistry
evaluations. APX3330 demonstrated favorable safety and tolerability in the ZETA-1 trial, consistent with the safety data from the prior 11 clinical trials.
We also in-licensed APX2009 and APX2014, which are second-generation analogs of APX3330. The unique dual mechanism of action of these Ref-1 inhibitors of reducing angiogenesis
and inflammation could potentially be beneficial in treating other retinal diseases such as age-related macular degeneration (“AMD”), and geographic atrophy (“GA”). We are currently evaluating local delivery routes in addition to the systemic
(oral) route as part of its pipeline expansion in retinal therapies.
Nyxol
In November 2022, we entered into a license and collaboration agreement (the “Nyxol License Agreement”) with FamyGen Life Sciences, Inc. (acquired
by Viatris, Inc. (“Viatris”) in January 2023) pursuant to which we granted Viatris an exclusive license to develop, manufacture, import, export and commercialize our refractive product candidate
phentolamine ophthalmic solution 0.75% (Nyxol® Eye Drops or “Nyxol”) for treating (a) reversal of mydriasis, (b) night vision
disturbances or dim light vision, and (c) presbyopia, and (ii) Nyxol and low dose pilocarpine for treating presbyopia (together, the “Nyxol Products”) worldwide except for certain countries and jurisdictions in Asia (the “Viatris Territory”).
Under the terms of the Nyxol License Agreement, Ocuphire in partnership with Viatris, will develop the Nyxol Products in the United States. Viatris will reimburse us for
budgeted costs related to the development of the Nyxol Products through FDA approval. Viatris will be responsible for developing the Nyxol Products in countries and jurisdictions in the Viatris Territory outside of the United States.
Nyxol is a once-daily eye drop formulation of phentolamine mesylate designed to reduce pupil diameter and improve visual acuity. Nyxol can potentially be used across multiple indications such as
treatment of pharmacologically-induced mydriasis (“RM”) (dilation of the pupil), presbyopia (age-related blurry near vision) and dim light or night vision disturbances (“DLD”) (halos, glares and starbursts). Our management believes these multiple
indications potentially represent a significant market opportunity. Nyxol has been studied in a total of 12 clinical trials (3 Phase 1, 5 Phase 2 and 4 Phase 3) in a total of over 1100 patients (with over 650 Nyxol-treated) and has demonstrated
promising clinical data across the three targeted refractive indications.
We submitted a new drug application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) in November 2022 under the 505(b)(2) pathway for Nyxol for RM with a Prescription Drug User Fee Act
(PDUFA) goal date of September 28, 2023. Upon approval of Nyxol for RM, as per the Nyxol License Agreement, we will receive a $10 million milestone payment.
We reported positive topline data from multiple late-stage clinical trials for Nyxol in RM, presbyopia and DLD. We reported positive top-line data from Phase 3 trials in RM: MIRA-2 in March 2021,
MIRA-3 in March 2022 and MIRA-4 in April 2022. We also reported positive top-line data from a Phase 2 trial of Nyxol for treatment of presbyopia, both as monotherapy and with low-dose pilocarpine (pilocarpine
hydrochloride ophthalmic solution 0.4%, “LDP”) as adjunctive therapy (VEGA-1). We reported top-line data from a Phase 3 trial in DLD in May 2022 (LYNX-1). Funded by our partner, Vitaris, the first phase 3 registration trial of Nyxol for
the treatment of presbyopia (VEGA-2), as monotherapy and with LDP as adjunctive therapy, was started in late December 2022, and topline results from this trial are expected in Q4 2023. Also funded by our partner Viatris, registration trials are
planned for presbyopia and DLD as well as a supportive long-term safety trial for chronic use of Nyxol in refractive indications.
We will continue to explore opportunities to acquire additional ophthalmic assets, expand current pipeline to other retinal indications with APX3330, APX2009 and APX2014, and to
seek strategic partners for late-stage development, regulatory preparation and commercialization of APX3330 in key global markets. To date, our primary activities have been conducting research and development activities, planning clinical
trials, performing business and financial planning, recruiting personnel and raising capital. We do not have any products approved for sale, and we do not expect to consistently generate significant revenues, other than license and
collaborations revenue, until, and unless, the FDA or other regulatory authorities approve and we successfully commercialize APX3330. Until such time, if ever, as we can consistently generate substantial product revenue, we expect to finance
our cash needs through a combination of equity and debt financings as well as through collaborations, strategic alliances and licensing arrangements.
Through June 30, 2023, we have funded our operations primarily through equity financings that totaled $54.1 million in gross proceeds, of which $21.15 million was received in
connection with the merger (“Merger”) with Rexahn Pharmaceuticals, Inc. (“Rexahn”) and through the issuance of convertible notes in private placements that totaled $8.5 million in gross proceeds net cash. In addition, we have received a
one-time non-refundable licensee fee payment of $35.0 million in the fourth quarter of 2022 and reimbursement for costs related to development in connection with the Nyxol License Agreement.
Our net loss was $10.8 million for the six months ended June 30, 2023 as compared to a net loss of $11.5 million for the six months ended June 30, 2022. As of June 30, 2023, we
had an accumulated deficit of $82.2 million. Furthermore, we anticipate that our expenses will increase as we:
|
•
|
continue clinical trials for APX3330, Nyxol and for any other product candidate in our future pipeline;
|
|
•
|
continue preclinical studies for APX3330, APX2009 and APX2014, Nyxol and for any other product candidate in our future pipeline;
|
|
•
|
develop additional product candidates that we identify, in-license or acquire;
|
|
•
|
seek regulatory approvals for any product candidates that successfully complete clinical trials;
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|
•
|
contract to manufacture our product candidates;
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|
•
|
maintain, expand and protect our intellectual property portfolio;
|
|
•
|
hire additional staff, including clinical, scientific, operational and financial personnel, to execute our business plan;
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|
•
|
add operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts;
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|
•
|
continue to operate as a public company; and
|
|
•
|
establish on our own or with partners, a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval.
|
Our net income (loss) will likely continue to fluctuate significantly from quarter to quarter and year to year, depending on the timing of our preclinical studies, clinical
trials, expenditures on other research and development activities (and reimbursement thereof), and from potential milestone payments received from and revenue earned under the Nyxol License Agreement or any other license and collaboration
agreements that we enter into, and potential payments we that may become payable from time to time under the Apexian Sublicense Agreement.
Clinical Milestones
APX3330
In January 2023, we announced topline efficacy and safety results from ZETA-1, a Phase 2b trial of APX3330 in diabetic retinopathy patients. In ZETA-1, APX3330 demonstrated
statistical significance on a key pre-specified endpoint, binocular DRSS worsening, which is a potential registration endpoint for DR and demonstrated favorable safety and tolerability.
In January 2023, we announced the initiation of the VEGA-2 Phase 3 pivotal trial, the first of two Phase 3 registration trials intended to support a presbyopia
indication for Nyxol alone and Nyxol with LDP. The study has completed enrollment period and topline results from this trial are expected in Q4 2023. Funded by our partner Viatris, registration
trials are planned for presbyopia and DLD, as well as a supportive long-term safety trial for chronic use of Nyxol in refractive indications.
Regulatory Update
In January 2023, we announced that the FDA has accepted for review the NDA for Nyxol for the treatment of pharmacologically-induced mydriasis (RM). The FDA assigned a
Prescription Drug User Fee Act (PDUFA) action date of September 28, 2023. If approved for RM by the FDA, Viatris would owe Ocuphire a $10 million milestone payment under the Nyxol License Agreement.
In July 2023, we announced the confirmation of the End-of-Phase 2 meeting with the FDA for APX3330 in Q4 2023.
On April 19, 2023, the Company terminated the employment of Mina Sooch, the former President and Chief Executive Officer of the Company, and appointed Richard Rodgers as the
Company’s interim President and Chief Executive Officer. On June 8, 2023, the Company entered into a Separation and Release Agreement with Ms. Sooch.
Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”)
On August 10, 2023, we entered into a common stock
purchase agreement (the “Purchase Agreement”) with Lincoln Park, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Ocuphire has the sole right, but not the obligation, to direct Lincoln Park
to purchase up to $50 million of shares of our common stock, par value $0.0001 (the “Common Stock”), from time to time over the 30-month term of the Purchase Agreement. Concurrently with entering into the Purchase Agreement, Ocuphire also
entered into a registration rights agreement with Lincoln Park (the “Registration Rights Agreement”), pursuant to which we agreed to register the resale of the shares of our Common Stock that have been and may be issued to Lincoln Park under
the Purchase Agreement pursuant to a registration statement. Upon the execution of the Purchase Agreement, we issued 246,792 shares of Common Stock to Lincoln Park as consideration for its commitment to purchase shares of our Common Stock
under the Purchase Agreement. Lincoln Park has agreed not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of our Common Stock.
Global Economic Conditions
Generally, worldwide economic conditions remain uncertain, particularly due to the effects of the conflict between Russia and Ukraine, disruptions in the banking system and
financial markets, lingering COVID-19 pandemic, increased inflation and increased interest rates. The general economic and capital market conditions both in the U.S. and worldwide, have been volatile in the past and at times have adversely
affected our access to capital and increased the cost of capital. The capital and credit markets may not be available to support future capital raising activity on favorable terms. If economic conditions decline, our future cost of equity or
debt capital and access to the capital markets could be adversely affected.
Additionally, our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors. Changes in economic conditions,
supply chain constraints, logistics challenges, labor shortages, the conflict in Ukraine, disruptions in the banking system and financial markets, and steps taken by governments and central banks, particularly in response to the COVID-19
pandemic as well as other stimulus and spending programs, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.
Financial Operations Overview
License and Collaborations Revenue
License and collaborations revenue to date was derived from a one-time non-refundable payment and reimbursement of expenses earned under the Nyxol License
Agreement, and to a much lesser degree, from license agreements with BioSense Global LLC (“BioSense”) and Processa Pharmaceuticals, Inc. (“Processa”) in connection with the Rexahn RX-3117 drug compound. We anticipate that we will recognize
revenue as we earn reimbursement for research and development services in connection with the Nyxol License Agreement and we may earn additional revenues from potential milestone and royalty payments from the agreements with Viatris,
BioSense, Processa, or from other license agreements entered into the future; however, the attainment of milestones or level of sales required to earn royalty payments is highly uncertain for the reasons explained below.
To date, outside of the license and collaborations revenue referenced above, we do not expect to generate significant revenue unless or until regulatory approval is obtained and
commercialization begins for APX3330 or Nyxol. If we fail to complete the development of APX3330, Nyxol, or any other product candidate we may pursue in the future, in a timely manner, or fail to obtain regulatory approval, our ability to
generate significant revenue would be compromised.
Operating Expenses
Ocuphire’s operating expenses are classified into two categories: general and administrative and research and development.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation costs, for personnel in functions not
directly associated with research and administrative activities. Other significant costs include insurance coverage for directors and officers and other property and liability exposures, legal fees relating to intellectual property and
corporate matters, professional fees for accounting and tax services, other services provided by business consultants and legal settlements.
Research and Development Expenses
To date, our research and development expenses have related primarily to the clinical stage development of APX3330 and Nyxol. Research and development expenses consist of costs
incurred in performing research and development activities, including compensation and benefits for research and development employees and costs for consultants, costs associated with preclinical studies and clinical trials, regulatory
activities, manufacturing activities to support clinical activities, license fees, nonlegal patent costs, fees paid to external service providers that conduct certain research and development, and an allocation of overhead expenses.
Pursuant to the Nyxol License Agreement, our budgeted research and development expenses related to the development of Nyxol are fully reimbursed by Viatris. However, all
research and development costs, including those related to Nyxol, are expensed as incurred and costs incurred by third parties are expensed as the contracted work is performed. We accrue for costs incurred as the services are being provided by
monitoring the status of the study or project, and the invoices are received from our external service providers. We adjust our accrual as actual costs become known. Research and development activities are central to our business model.
We expect that APX3330 and Nyxol will have higher development costs during the later stages of clinical development, as compared to costs incurred during their earlier stages of
development, primarily due to the increased size and duration of the later-stage clinical trials. We expect our research and development expenses to increase over the next several years. However, it is difficult for us to determine with
certainty the duration, costs and timing to complete our current or future preclinical programs and clinical trials of APX3330, Nyxol, and other product candidates. The duration, costs and timing of clinical trials and development of APX3330,
Nyxol and other product candidates will depend on a variety of factors that include, but are not limited to, the following:
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• |
per patient trial costs;
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|
• |
the number of patients that participate in the trials;
|
|
• |
the number of sites included in the trials;
|
|
• |
the countries in which the trials are conducted;
|
|
• |
the length of time required to enroll eligible patients;
|
|
• |
the number of doses that patients receive;
|
|
• |
the drop-out or discontinuation rates of patients;
|
|
• |
potential additional safety monitoring or other studies requested by regulatory agencies;
|
|
• |
the duration of patient follow-up;
|
|
• |
the phase of development of the product candidate;
|
|
• |
arrangements with contract research organizations and other service providers; and
|
|
• |
the efficacy and safety profile of the product candidates.
|
Interest expense consists of interest costs on principal related to a short-term loan (related to financing an insurance policy) during the period it was outstanding. The
short-term loan had an annual interest rate of 5.5%. The short-term loan was fully repaid in May 2022.
Other Income (Expense), net
Other income (expense), net reflected in this line item includes interest earned from cash and cash equivalent investments, realized and unrealized gains (losses) from equity
investments and reimbursements in connection with grants and other sources when they occur. In addition, other income (expense), net also includes payments when made by us in connection with the Contingent Value Rights Agreement (the “CVR
Agreement”) with former Rexahn shareholders.
Provision for Income Taxes
Provision for income taxes consists of federal and state income taxes in the United States, as well as deferred income taxes and changes in related valuation allowance reflecting the net tax
effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A full valuation allowance has been provided on the net deferred tax assets as
of June 30, 2023 and December 31, 2022.
Results of Operations
Comparison of Three Months Ended June 30, 2023 and 2022
The following table summarizes Ocuphire’s operating results for the periods indicated (in thousands):
|
|
For the Three Months Ended
|
|
|
|
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
License and collaborations revenue
|
|
$
|
3,674
|
|
|
$
|
—
|
|
|
$
|
3,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
4,340
|
|
|
|
1,776
|
|
|
|
2,564
|
|
Research and development
|
|
|
4,723
|
|
|
|
3,162
|
|
|
|
1,561
|
|
Total operating expenses
|
|
|
9,063
|
|
|
|
4,938
|
|
|
|
4,125
|
|
Loss from operations
|
|
|
(5,389
|
)
|
|
|
(4,938
|
)
|
|
|
(451
|
)
|
Interest expense
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
4
|
|
Other income, net
|
|
|
428
|
|
|
|
15
|
|
|
|
413
|
|
Loss before income taxes
|
|
|
(4,961
|
)
|
|
|
(4,927
|
)
|
|
|
(34
|
)
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net loss
|
|
$
|
(4,961
|
)
|
|
$
|
(4,927
|
)
|
|
$
|
(34
|
)
|
License and Collaborations Revenue
License and collaborations revenue was $3.7 million for the three months ended June 30, 2023. There was no license and collaborations revenue during the three months ended June 30, 2022.
Revenue during the second quarter of 2023 was derived from the reimbursement of research and development services under the Nyxol License Agreement.
General and Administrative
General and administrative expenses for the three months ended June 30, 2023 were $4.3 million compared to $1.8 million for the three months ended June 30, 2022. The increase period over period
of $2.6 million was primarily attributable to severance costs associated with the departure of our former Chief Executive Officer in the amount of $1.2 million, stock-based compensation of $0.9 million, professional services of $0.1 million,
legal support of $0.1 million and personnel related and other costs of $0.3 million on a net basis. General and administrative expenses included $1.2 million and $0.3 million in stock-based compensation expense during the three months ended June
30, 2023 and 2022, respectively.
Research and Development
The following table illustrates the components of our research and development expenses for the periods presented (in thousands):
|
|
For the Three Months Ended
|
|
|
|
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
External costs:
|
|
|
|
|
|
|
|
|
|
Nyxol
|
|
$
|
3,366
|
|
|
$
|
1,786
|
|
|
$
|
1,580
|
|
APX 3330:
|
|
|
767
|
|
|
|
858
|
|
|
|
(91
|
)
|
Unallocated
|
|
|
180
|
|
|
|
136
|
|
|
|
44
|
|
Total external cost
|
|
|
4,313
|
|
|
|
2,780
|
|
|
|
1,533
|
|
Internal costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee related expenses
|
|
|
401
|
|
|
|
371
|
|
|
|
30
|
|
Facilities, supplies and other
|
|
|
9
|
|
|
|
11
|
|
|
|
(2
|
)
|
Total internal costs
|
|
|
410
|
|
|
|
382
|
|
|
|
28
|
|
Total research and development expenses
|
|
$
|
4,723
|
|
|
$
|
3,162
|
|
|
$
|
1,561
|
|
Research and development expenses for the three months ended June 30, 2023 were $4.7 million compared to $3.2 million for the three months ended June 30, 2022. The $1.6 million increase was
primarily attributable to increased clinical costs of $1.4 million for the Nyxol VEGA-2 trial offset by decreased clinical costs for prior Nyxol trials and the APX3330 ZETA-1 trial period over period as well as increased consulting and other
costs of $0.2 million on a net basis during the current three month period. Pursuant to the Nyxol License Agreement, our budgeted research and development expenses related to the development of Nyxol are fully
reimbursed by Viatris. Research and development expenses also included $0.3 million and $0.2 million in stock-based compensation expense during the three months ended June 30, 2023 and 2022, respectively.
Interest Expense
Interest expense for the three months ended June 30, 2022 of $4,000 was comprised of interest on principal related to a short-term loan (related to financing an insurance policy). There was no
interest expense during the current three month period.
Other Income, net
During the three months ended June 30, 2023, Ocuphire had other income, net of $0.4 million related primarily to interest income in connection with our cash and cash equivalents
on-hand.
During the three months ended June 30, 2022, Ocuphire had other income, net of $15,000 which consisted of interest income related to cash and cash equivalents of $22,000 and realized currency gains of
$2,000, offset in part by unrealized losses from our short-term investments of $9,000.
Comparison of Six Months Ended June 30, 2023 and 2022
The following table summarizes Ocuphire’s operating results for the periods indicated (in thousands):
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
License and collaborations revenue
|
|
$
|
5,423
|
|
|
$
|
—
|
|
|
$
|
5,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
6,625
|
|
|
|
3,512
|
|
|
|
3,113
|
|
Research and development
|
|
|
10,318
|
|
|
|
7,934
|
|
|
|
2,384
|
|
Total operating expenses
|
|
|
16,943
|
|
|
|
11,446
|
|
|
|
5,497
|
|
Loss from operations
|
|
|
(11,520
|
)
|
|
|
(11,446
|
)
|
|
|
(74
|
)
|
Interest expense
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
9
|
|
Other income (expense), net
|
|
|
768
|
|
|
|
(67
|
)
|
|
|
835
|
|
Loss before income taxes
|
|
|
(10,752
|
)
|
|
|
(11,522
|
)
|
|
|
770
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net loss
|
|
$
|
(10,752
|
)
|
|
$
|
(11,522
|
)
|
|
$
|
770
|
|
License and Collaborations Revenue
License and collaborations revenue was $5.4 million for the six months ended June 30, 2023. There was no license and collaboration revenue during the six months ended June 30, 2022. Revenue
during the six month period in 2023 was derived primarily from the reimbursement of research and development services under the Nyxol License Agreement.
General and Administrative
General and administrative expenses for the six months ended June 30, 2023 were $6.6 million compared to $3.5 million for the six months ended June 30, 2022. The increase period over period of
$3.1 million was primarily attributable to severance costs associated with the departure of our former Chief Executive Officer of $1.2 million, stock-based compensation of $1.1 million, professional services of $0.2 million, legal support of $0.2
million, business development activities of $0.1 million and personnel related and other costs of $0.3 million on a net basis. General and administrative expenses totaled $1,634,000 and $571,000 in stock-based compensation expense during the six
months ended June 30, 2023 and 2022, respectively.
Research and Development
The following table illustrates the components of our research and development expenses for the periods presented (in thousands):
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
External costs:
|
|
|
|
|
|
|
|
|
|
Nyxol
|
|
$
|
7,167
|
|
|
$
|
4,880
|
|
|
$
|
2,287
|
|
APX 3330:
|
|
|
1,653
|
|
|
|
1,938
|
|
|
|
(285
|
)
|
Unallocated
|
|
|
378
|
|
|
|
273
|
|
|
|
105
|
|
Total external cost
|
|
|
9,198
|
|
|
|
7,091
|
|
|
|
2,107
|
|
Internal costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee related expenses
|
|
|
1,108
|
|
|
|
775
|
|
|
|
333
|
|
Facilities, supplies and other
|
|
|
12
|
|
|
|
68
|
|
|
|
(56
|
)
|
Total internal costs
|
|
|
1,120
|
|
|
|
843
|
|
|
|
277
|
|
Total research and development expenses
|
|
$
|
10,318
|
|
|
$
|
7,934
|
|
|
$
|
2,384
|
|
Research and development expenses for the six months ended June 30, 2023 were $10.3 million compared to $7.9 million for the six months ended June 30, 2022. The $2.4 million increase was
primarily attributable to increased clinical costs of $1.2 million for the Nyxol VEGA-2 trial offset by decreased clinical costs for prior Nyxol trials and the APX3330 ZETA-1 trial and increased manufacturing activities of $0.4 million for
APX3330 period over period. Additionally, higher payroll and consulting costs of $0.5 million and other operating expenses of $0.3 million, on net basis, contributed to the expense increase during the current six month period. Pursuant to the Nyxol License Agreement, our budgeted research and development expenses related to the development of Nyxol are fully reimbursed by Viatris. Research and development expenses also included $0.6
million and $0.3 million in stock-based compensation expense during the six months ended June 30, 2023 and 2022, respectively.
Interest Expense
Interest expense for the six months ended June 30, 2022 of $9,000 was comprised of interest on principal related to a short-term loan (related to financing an insurance policy). There was no
interest expense during the current six month period.
Other Income (Expense), net
During the six months ended June 30, 2023, Ocuphire had other income (expense), net of $0.8 million related primarily to interest income in connection with our cash and cash
equivalents on-hand.
During the six months ended June 30, 2022, Ocuphire had other expense, net of $67,000 stemming principally from net unrealized losses from our short-term investments of $93,000, offset in part by interest income of
$24,000 related to cash and cash equivalents on hand and realized currency gains of $2,000.
Liquidity and Capital Resources
Capital Resources
As of June 30, 2023, our principal sources of liquidity consisted of cash and cash equivalents of $40.0 million. We believe that our cash on hand will be sufficient to fund our
operations for at least twelve months beyond the date of this filing. As of June 30, 2023, our cash and cash equivalents on-hand were held at two large financial institutions.
Historical Capital Resources
Our primary source of cash to fund our operations has been various equity offerings in the amount of $54.1 million and the issuance of convertible notes in the amount of $8.5 million, inclusive
of the promissory notes exchanged for Ocuphire convertible notes (the “Ocuphire Convertible Notes”). In addition, during the fourth quarter of 2022, we received a one-time non-refundable cash payment of $35.0 million and recently received
reimbursement for costs related to development in connection with the Nyxol License Agreement.
At-The-Market Program
On February 4, 2021, we filed a Form S-3 shelf registration under the Securities Act which was declared effective by the SEC on February 12, 2021 (the “2021 Shelf”) under which
the Company may offer and sell, from time to time in our sole discretion, securities having an aggregate offering price of up to $125 million. In connection with the 2021 Shelf, on March 11, 2021, we entered into a sales agreement with
JonesTrading Institutional Services LLC (“JonesTrading”) under which we may offer and sell, from time to time at our sole discretion, to or through JonesTrading, acting as agent and/or principal, shares of our common stock having an aggregate
offering price of up to $40 million (the “ATM”). A total of 4,627,870 shares of common stock were sold under the ATM for net proceeds through June 30, 2023 in the amount of $17.3 million. No shares of common stock were sold under the ATM during
the fourth quarter of 2022 or during the first two quarters of 2023.
Registered Direct Offering
On June 4, 2021, we entered into a placement agency agreement with A.G.P./Alliance Global Partners (“AGP”). Pursuant to the terms of the placement agency agreement, AGP on June
8, 2021, sold an aggregate of 3,076,923 shares of our common stock and warrants to purchase 1,538,461 shares of our common stock (the “RDO Warrants”) at an offering price of $4.875 per share and 0.50 RDO Warrants, for gross proceeds of $15.0
million, before deducting AGP’s fees and related offering expenses in the amount of $1.1 million. The purchase agreement contains customary representations, warranties and agreements by Ocuphire, customary conditions to closing, indemnification
obligations of Ocuphire, other obligations of the parties and termination provisions.
The RDO Warrants have an exercise price of $6.09 per share, are exercisable upon the initial issuance date of June 8, 2021, and will expire five years following
the initial exercise date. Subject to limited exceptions, a holder of a RDO Warrant will not have the right to exercise any portion of its RDO Warrants if the holder, together with its affiliates, would
beneficially own in excess of 4.99% (or, at the election of a holder prior to the date of issuance, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise; provided, however, that upon
prior notice to us, the holder may increase or decrease the beneficial ownership limitation, provided further that in no event shall the beneficial ownership limitation exceed 9.99%. As of June 30, 2023, 1,538,461 RDO Warrants were
still outstanding. The offering of the securities was made pursuant to our effective shelf registration statement on Form S-3.
Pre-Merger Financing
Securities Purchase Agreement
On June 17, 2020, Ocuphire, Rexahn and certain investors entered into a Securities Purchase Agreement, which was amended and restated in its entirety on June 29, 2020 (as amended and restated,
the “Securities Purchase Agreement”). Pursuant to the Securities Purchase Agreement, the investors invested a total of $21.15 million in cash, including $300,000 invested by directors of Ocuphire Pharma, Inc. prior to the Merger, and one director
of Rexahn, upon closing of the Merger (the “Pre-Merger Financing”). Pursuant to the Pre-Merger Financing, (i) Ocuphire issued and sold to the investors shares of common stock of Ocuphire Pharma, Inc. prior to the Merger (the “Initial Shares”)
which converted pursuant to the exchange ratio in the Merger into an aggregate of 1,249,996 shares (the “Converted Initial Shares”) of common stock, (ii) Ocuphire deposited into escrow, for the benefit of the investors, additional shares of
common stock of Ocuphire Pharma, Inc. prior to the Merger (the “Additional Shares”) which converted pursuant to the exchange ratio in the Merger into an aggregate of 3,749,992 shares of common stock (the “Converted Additional Shares”), which
Converted Additional Shares were delivered (or became deliverable) to the investors on November 19, 2020, and (iii) we agreed to issue to each investor on the tenth trading day following the consummation of the Merger (x) Series A Warrants
representing the right to acquire shares of common stock equal to the sum of (A) the Converted Initial Shares purchased by the investor, (B) the Converted Additional Shares delivered or deliverable to the investor, without giving effect to any
limitation on delivery contained in the Securities Purchase Agreement and (C) the initial number of shares of common stock, if any, underlying the Series B Warrants issued to the investor and (y) additional warrants to purchase shares of common
stock.
Waiver Agreements
Effective February 3, 2021, each investor that invested in the Pre-Merger Financing (each, a “Holder”) entered into a Waiver Agreement with the Company (collectively, the “Waiver Agreements”).
Pursuant to the Waiver Agreements, the Holders and Ocuphire agreed to waive certain rights, finalize the exercise price and number of Series A Warrants and Series B Warrants, eliminate certain financing restrictions, extend the term of certain
leak-out agreements, and, in the case of certain Holders, grant certain registration rights for the shares underlying the warrants.
The Waiver Agreements provide for the permanent waiver of the full ratchet anti-dilution provisions, contained in the Series A Warrants (as certain of the anti-dilution provisions had
previously caused liability accounting treatment for the Series A Warrants). Upon the effective date of the Waiver Agreement, the Series A Warrants were reclassified to equity.
Pursuant to the Waiver Agreements, the number of shares underlying all of the Series B Warrants was fixed to 1,708,335 in the aggregate with respect to all Holders.
Series A Warrants
The Series A Warrants were issued on November 19, 2020 at an initial exercise price of $4.4795 per share, were immediately exercisable upon issuance and have a term of five years from the date of
issuance. The Series A Warrants are exercisable for 5,665,838 shares of common stock in the aggregate (without giving effect to any limitation on exercise contained therein). As of June 30, 2023, 5,665,838 Series A Warrants were still
outstanding.
At issuance, the Series A Warrants contained certain provisions that could have resulted in a downward adjustment of the initial exercise price and an upward adjustment in the number of shares
underlying the warrants if Ocuphire were to have issued or sold, or made an agreement to issue or sell, any shares of common stock for a price lower than the exercise price then in effect. Pursuant to the terms of the Waiver Agreements, these
provisions are no longer in effect.
Series B Warrants
The Series B Warrants had an exercise price of $0.0001, were exercisable upon issuance and would have expired on the day following the later to occur of (i) the Reservation Date (as defined
therein) or (ii) the date on which the investor’s Series B Warrants would have been exercised in full (without giving effect to any limitation on exercise contained therein). The Series B Warrants were initially exercisable for 665,836 shares of
common stock in the aggregate (without giving effect to any limitation on exercise contained therein) and ultimately became exercisable for 1,708,335 shares of common stock upon execution of the Waiver Agreements. As of June 30, 2023, none of the
Series B Warrants remained outstanding.
At issuance, the Series B Warrants contained certain provisions that could have resulted in the issuance of additional Series B Warrants depending on the dollar volume-weighted average prices of a share of Common
Stock during a 45-trading day reset period. Pursuant to the terms of the Waiver Agreements, those provisions were no longer in effect.
Ocuphire Convertible Notes
From May 2018 through March 2020, we issued the Ocuphire Convertible Notes for aggregate gross proceeds of $8.5 million, inclusive of the promissory notes exchanged for Ocuphire Convertible
Notes. The final closing of the Ocuphire Convertible Notes occurred on March 10, 2020. The Ocuphire Convertible Notes had an interest rate of 8% per annum. On November 4, 2020, all of Ocuphire’s outstanding notes
were converted into 977,128 shares of Ocuphire common stock in connection with the completion of the Merger.
Cash Flows
The following table summarizes Ocuphire’s cash flows for the periods indicated (in thousands):
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(2,657
|
)
|
|
$
|
(9,979
|
)
|
Net cash provided by (used in) investing activities
|
|
|
—
|
|
|
|
—
|
|
Net cash provided by financing activities
|
|
|
—
|
|
|
|
2,470
|
|
Net decrease in cash and cash equivalents
|
|
$
|
(2,657
|
)
|
|
$
|
(7,509
|
)
|
Cash Flow from Operating Activities
For the six months ended June 30, 2023, cash used in operating activities of $2.7 million was attributable to a net loss of $10.8 million, partially offset by $2.2 million in non-cash operating
expenses and a net change cash source of $5.8 million in Ocuphire’s net operating assets and liabilities. The non-cash expenses consisted principally of stock-based compensation of $2.2 million and unrealized loss on short-term investments of
$27,000. The change in operating assets and liabilities was primarily attributable to an increase in Ocuphire’s accounts payable and accrued expenses, and by decreases in our accounts receivable, contract assets, unbilled receivables and prepaid
expenses, all associated with Ocuphire’s operating expenses under the normal course of business.
For the six months ended June 30, 2022, cash used in operating activities of $10.0 million was attributable to a net loss of $11.5 million, partially offset by $1.0 million in non-cash operating
expenses, and a net change of approximately $0.6 million in Ocuphire’s net operating assets and liabilities. The non-cash expenses consisted principally of stock-based compensation of $0.9 million and unrealized loss on short-term investments of
$0.1 million. The change in operating assets and liabilities was primarily attributable to a net cash source of $0.6 million attributed to a net decrease in our prepaid expenses associated with the fluctuations of Ocuphire’s operating expenses
and timing of payments.
Cash Flow from Investing Activities
There were no sources or uses from investing activities during the periods presented.
Cash Flow from Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2022 was $2.5 million that consisted principally of proceeds received from the 2021 ATM net of issuance costs in the
amount of $3.0 million, offset in part by payments made on the short-term loan of $0.5 million. There were no sources or uses from financing activities during the six month period ending June 30, 2023.
Liquidity and Capital Resource Requirements
As of June 30, 2023, we had cash and cash equivalents of $40.0 million. License and collaborations revenue inception to date was derived from a one-time non-refundable payment of $35 million and reimbursement and expected reimbursement of expenses earned under the Nyxol License Agreement, and to a much lesser degree, from license agreements with
BioSense Global LLC (“BioSense”) and Processa Pharmaceuticals, Inc. (“Processa”) in connection with the Rexahn RX-3117 drug compound. We anticipate that we will recognize revenue as we earn reimbursement for research and development services in
connection with the Nyxol License Agreement and we may earn additional revenues from future potential milestone and royalty payments from the agreements with Viatris, BioSense, Processa, or from other license agreements entered into the future;
however, the attainment of milestones or level of sales required to earn royalty payments is highly uncertain for the reasons explained below.
To date, outside of the license and collaborations revenue referenced above, we do not expect to generate significant revenue unless or until regulatory
approval is obtained and commercialization begins for APX3330 or Nyxol. If we fail to complete the development of APX3330, Nyxol, or any other product candidate we may pursue in the future, in a timely manner, or fail to obtain regulatory
approval, our ability to generate significant revenue would be compromised.
In addition, on August
10, 2023, we entered into a common stock purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which provides that we have the sole right, but not the obligation, to direct Lincoln Park to
purchase up to $50 million of shares of our common stock, from time to time over the 30-month term of the Purchase Agreement. Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement with
Lincoln Park (the “Registration Rights Agreement”), pursuant to which we agreed to register the resale of the shares of our common stock that have been and may be issued to Lincoln Park under the Purchase Agreement pursuant to a registration
statement. We intend to file a prospectus supplement to our Registration Statement (File No. 333-252715) on August 11, 2023 with the Commission. Per the terms of the Purchase Agreement, we will be unable to sell shares of our common stock to
Lincoln Park if the sale price falls below $0.25 per share. Therefore, there is no assurance that we will have full access to the facility during the term of the Purchase Agreement.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms
of these securities may include liquidation, warrants, or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability
to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through future collaborations, strategic alliances or licensing arrangements with pharmaceutical
partners, we may have to relinquish valuable rights to our technologies, future revenue streams or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or through
collaborations, strategic alliances or licensing arrangements when needed, we may be required to delay, limit, reduce or terminate our product development, future commercialization efforts, or grant rights to develop and market our product
candidates that we would otherwise prefer to develop and market ourselves.
Future Capital Requirements
Pursuant to the Nyxol License Agreement, our budgeted research and development expenses related to the development of Nyxol are fully reimbursed by Viatris.
The development of APX3330 is subject to numerous uncertainties, and we have based these estimates on assumptions that may prove to be substantially different than what we currently anticipate and could result in cash resources being used
sooner than what we currently expect. Additionally, the process of advancing early-stage product candidates and testing product candidates in clinical trials is costly, and the timing of progress in these clinical trials is uncertain. Our
ability to successfully transition to profitability will be dependent upon achieving a level of product sales adequate to support our cost structure. We cannot give any assurance that we will ever be profitable or generate positive cash flow
from operating activities.
Contractual Obligations and Commitments
Facility Lease
We lease a facility under a non-cancellable operating lease that expires on December 31, 2023, as amended, for a base rent in the amount of $3,000 per month.
Apexian Sublicense Agreement
On January 21, 2020, we entered into the Apexian Sublicense Agreement, pursuant to which we obtained exclusive worldwide
patent and other intellectual property rights that constitute a Ref-1 Inhibitor program relating to therapeutic applications to treat disorders related to ophthalmic and diabetes mellitus conditions. The lead compound in the Ref-1 Inhibitor
program is APX3330, which we intend to develop as an oral tablet therapeutic to treat NPDR. The unique, dual mechanism of action of Ref-1 inhibitors (e.g., APX3330, APX2009 and APX2014) of reducing angiogenesis and inflammation could
potentially be beneficial in treating other retinal diseases such as AMD, and GA. Ocuphire is currently evaluating local delivery routes in addition to the systemic (oral) route as part of its pipeline expansion into retina.
In connection with the Apexian Sublicense Agreement, we issued 843,751 shares of our common stock to Apexian and certain of Apexian’s affiliates.
We agreed to make one-time milestone payments under the Apexian Sublicense Agreement for each of the first ophthalmic indication and the first diabetes
mellitus indication. These milestone payments include (i) payments for specified developmental and regulatory milestones (including completion of the first Phase 2 trial (if such trial meets a primary endpoint) and the first Phase 3 pivotal
trial in the United States, and filing and achieving regulatory approval from the FDA for the first New Drug Application for a compound) totaling up to $11 million in the aggregate and (ii) payments for specified sales milestones of up to $20
million in the aggregate, each of which net sales milestone payments is payable once, upon the first achievement of such milestone.
Lastly, we also agreed to make royalty payments equal to a single-digit percentage of our net sales of products covered by the patents under the Apexian
Sublicense Agreement. None of the milestone or royalty payments were triggered as of the date of this Report.
In the course of normal operations, we entered into cancellable purchase commitments with our suppliers for various key research, clinical and manufacturing
services. The purchase commitments covered by these arrangements are subject to change based on our research and development efforts.
Other Funding Requirements
As noted above, certain of our cash requirements relate to the funding of our ongoing research and
development of APX3330, inclusive of any potential milestone and royalty obligations under our intellectual property licenses. See “Part I, Item 1— Business—APX3330 Clinical Experience Summary —Ocuphire Clinical Development Plan —Potential
Clinical Plans for APX3330—Future In-Licensing and Acquisition Opportunities—Manufacturing—Apexian Sublicense Agreement— Review and Approval of Drugs in the United States” in our Annual Report on Form 10-K for the year ended December 31,
2022 for a discussion of design, development, pre-clinical and clinical activities that we may conduct in the future, including expected cash expenditures required for some of those activities, to the extent we are able to estimate such costs.
Our other cash requirements within the next twelve months include accounts payable, accrued expenses, purchase commitments and other current liabilities. Our other
cash requirements greater than twelve months from various contractual obligations and commitments may include operating leases and contractual agreements with third-party service providers for clinical research, product development,
manufacturing, commercialization, supplies, payroll, equipment maintenance, and audits for periods into calendar year 2024. Refer to Note 3 – Commitments and Contingencies included in “Part 1, Item 1 – Financial Statements” of this Report for further detail of our lease obligation and license agreements with regard to the timing of expected future payments.
We expect to satisfy our short-term and long-term obligations through cash on hand, from future equity and debt financings, and from reimbursement payments, potential
milestone and royalty payments under the Nyxol License Agreement and any future collaborations and license agreements, until we generate an adequate level of revenue from commercial sales to cover expenses, if ever.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with U.S. GAAP. These accounting principles require us to make estimates and judgments that can affect the
reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented. We believe that the estimates and judgments upon which we rely are
reasonably based upon information available to us at the time that we make these estimates and judgments. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The
accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.
Our significant accounting policies are discussed in Note 1 — Company Description and Summary of Significant Accounting Policies, included in “Part I, Item 1 –
Financial Statements” of this Report. We believe that the following accounting policies and estimates are the most critical to aid in fully understanding and evaluating our reported financial results. These estimates require our most difficult,
subjective, or complex judgments because they relate to matters that are inherently uncertain. We have reviewed these critical accounting policies and estimates and related disclosures with the Audit Committee of our Board of Directors. We have
not made any material changes to date, nor do we believe there is a reasonable likelihood of a material future change to the accounting methodologies for the areas described below.
License and Collaborations Revenue
We account for license and collaborations revenue in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 606, Revenue from Contracts with Customers. The guidance provides a unified model to determine how revenue is recognized. We have entered into license and collaboration agreements which have
revenue recognition implications. We recognize license and collaborations revenue by first allocating the transaction price of a contract to each performance obligation under the contract based on its stand-alone price. The stand-alone price of
each performance obligation is based on its fair value utilizing a discounted cash flow approach, taking into consideration assumptions, including projected worldwide net profit for each of the respective programs based on probability
assessments, projections based on internal forecasts, industry data, and information from other guideline companies within the same industry and other relevant factors. We do not expect to have in the future, significant variable consideration
adjustments related to our existing license and collaborations revenue recognized. For discussion about the determination of license and collaborations revenue, see Note 9 — License and Collaboration Agreements included in “Part 1, Item 1 –
Financial Statements” of this Report.
Stock-based Compensation
Ocuphire accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation
— Stock Compensation. Accordingly, compensation costs related to equity instruments granted are recognized at the grant date fair value which is not subject to remeasurement. We record equity instrument
forfeitures when they occur. For discussions about the application of grant date fair value associated with our stock-based compensation, see Note 7 — Stock-based Compensation included in “Part 1, Item 1 – Financial Statements” of this Report.
Income Tax Assets and Liabilities
A full valuation allowance has been provided on our net deferred tax assets given the uncertainty of future taxable income and other related factors impacting the
realizability of our remaining net deferred tax assets. For additional information, see Note 12 — Income Taxes included in “Part II, Item 8 – Consolidated Financial Statements and Supplementary Data” in our Annual Report filed on Form 10-K
for the year ended December 31, 2022, and see Note 11 — Income Taxes included in “Part 1, Item 1 – Financial Statements” of this Report.
We are subject to numerous contingencies arising in the ordinary course of business, including obligations related to certain license agreements. For additional
information, see Note 3 — Commitments and Contingencies included in “Part 1, Item 1 – Financial Statements” of this Report.
Recent Accounting Pronouncements
Refer to Note 1— “Company Description and Summary of Significant Accounting Policies” to our condensed financial statements included in “Part 1, Item 1 – Financial Statements” in this Report for
a discussion of recently issued accounting pronouncements.
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Not applicable for smaller reporting companies.
Item 4. |
Controls and Procedures
|
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in our Exchange Act reports is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure.
We designed and evaluated our disclosure controls and procedures recognizing that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance and
not absolute assurance of achieving the desired control objectives. Also, the design of a control system must reflect the fact that there are resource constraints and that the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been
detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain
assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure
controls and procedures, as such term is defined in Rules 13a-15(e) and 15(d)- 15(e) promulgated under the Exchange Act as of June 30, 2023. Based on this evaluation, our principal executive officer and principal financial officer concluded that
our disclosure controls and procedures were effective as of June 30, 2023.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2023, that have materially affected,
or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1.
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Legal Proceedings
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From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. We are not currently a
party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs,
diversion of management resources and other factors.
Other than as set forth below, there have been no material changes in our risk factors previously disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2022. You should carefully consider the risks and uncertainties described below and therein.
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
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None.
Item 3. |
Defaults Upon Senior Securities
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None.
Item 4. |
Mine Safety Disclosures
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Not applicable to our Company.
Item 5. |
Other Information
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None.
EXHIBIT
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NUMBER
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DESCRIPTION OF DOCUMENT
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3.1
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3.2
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3.3
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3.4
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3.5
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3.6
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3.7
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3.8
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3.9
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3.10
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10.1+
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10.2
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Separation and Release Agreement by and between Ocuphire Pharma, Inc. and Mina Sooch, dated June 8, 2023.
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Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.INS
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Inline XBRL Instance Document.
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101.SCH
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Inline XBRL Taxonomy Extension Schema Document.
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document.
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document.
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document.
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104
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
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+
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Indicates management contract or compensatory plan.
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*
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Documents are furnished not filed.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: August 11, 2023
Ocuphire Pharma, Inc.
By:
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/s/ Richard J. Rodgers
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Richard J. Rodgers
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Interim Chief Executive Officer
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(Principal Executive Officer)
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By:
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/s/ Amy Rabourn
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Amy Rabourn
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Senior Vice President of Finance
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(Principal Financial Officer)
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