What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-12 · 314 added, 298 removed, 296 unchanged (67% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the 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,

The following discussion of our financial condition and results of operations should be read in conjunction with the 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, 2020.

Forward-Looking Statements

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Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance.

may, in some cases, use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that

convey uncertainty of future events or outcomes to identify these forward-looking statements.

in some cases, use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “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

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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.

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.

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currently includes two small molecule product candidates targeting front and back of the eye indications.

Its lead product candidate, Nyxol ® Eye Drops (“Nyxol”), is a once-daily eye drop formulation of phentolamine mesylate

designed to reduce pupil diameter and improve visual acuity.

As a result, Nyxol can potentially be used for the treatment of multiple indications such as dim light or night vision disturbances (“NVD”), reversal of pharmacologically-induced

mydriasis (which refers to the use of pharmacological agents to dilate the pupil for office-based eye exams) and presbyopia (a gradual, age-related loss of the eyes’ ability to focus on nearby objects).

Ocuphire management believes this

multiple indication potential represents a significant market opportunity.

Nyxol has been studied across three Phase 1, five Phase 2, and one Phase 3 trials totaling over 500 patients and has demonstrated promising clinical data for use in

multiple ophthalmic indications.

Ocuphire initiated a Phase 3 trial for reversal of pharmacologically-induced mydriasis (“RM”) in the fourth quarter of 2020 and reported positive top-line results within four months on March 15, 2021.

initiated a Phase 2 trial in combination with low dose pilocarpine for presbyopia (VEGA-1) in the first quarter of 2021 and reported positive top-line results on June 30, 2021.

The company is evaluating further the VEGA-1 results and designing

pivotal Phase 3 trials (VEGA-2/3) to be conducted in the first half of 2022.

Ocuphire also initiated a Phase 3 trial (LYNX-1) for the treatment of NVD in the fourth quarter of 2020 and top-line data for this study are expected to be reported in

Building on the positive results of the MIRA-2 Phase 3 trial for Nyxol, a second Phase 3 registration trial (MIRA-3) and a small pediatric study (MIRA-4) are planned to start in the second half of 2021, with results expected in

Its lead product candidate, Nyxol ® Eye Drops (“Nyxol”), is a once-daily eye drop formulation of phentolamine mesylate designed to reduce

pupil diameter and improve visual acuity.

Based on this mechanism of action, Nyxol can potentially be used for the treatment of multiple indications such as reversal of pharmacologically-induced mydriasis (which refers to the use of pharmacological

agents to dilate the pupil for office-based eye exams), presbyopia (a gradual, age-related loss of the eyes’ ability to focus on nearby objects) and dim light or night vision disturbances (“NVD”).

Ocuphire management believes this multiple

indication potential represents a significant market opportunity.

Nyxol has been studied across three Phase 1, five Phase 2, and one Phase 3 trials enrolling over 500 patients with more than 330 patients treated with Nyxol.

These trials have

demonstrated promising clinical data for use in multiple ophthalmic indications.

Ocuphire initiated a Phase 3 trial (MIRA-2) for reversal of pharmacologically-induced mydriasis (“RM”) in the fourth quarter of 2020 and reported positive top-line

results within four months on March 15, 2021.

Ocuphire initiated a Phase 2 trial in combination with low dose pilocarpine for presbyopia (VEGA-1) in the first quarter of 2021 and reported positive top-line results on June 30, 2021.

The company is

now further evaluating the VEGA-1 results and designing the Phase 3 program to be initiated in the first half of 2022.

Ocuphire also initiated a Phase 3 trial (LYNX-1) for the treatment of NVD in the fourth quarter of 2020;

top-line data for this

study are expected to be reported in early 2022.

Building on the positive results of the MIRA-2 Phase 3 trial for Nyxol, a second Phase 3 registration trial (MIRA-3) and a small pediatric study (MIRA-4) are planned to start in the fourth quarter of

2021, with results expected in early 2022.

Assuming successful and timely completion of these RM trials, Ocuphire anticipates submitting a New Drug Application (“NDA”) for Nyxol to the U.S.

Food and Drug Administration (“FDA”) in late 2022 under the 505(b)(2) pathway.

Ocuphire’s second product candidate, APX3330, is a twice-a-day oral tablet designed to target multiple pathways relevant to retinal and choroidal (the vascular layer of the eye) vascular diseases

such as diabetic retinopathy (“DR”) and diabetic macular edema (“DME”) which, if left untreated, can result in permanent visual acuity loss and eventual blindness.

DR is a disease resulting from diabetes in which chronically elevated blood sugar

levels cause progressive damage to blood vessels in the retina.

DME is a severe form of DR which involves leakage of protein and fluid into the macula, the central portion of the retina, causing swelling and damage.

Prior to Ocuphire’s

in-licensing of the product candidate, APX3330 had been studied by third parties in six Phase 1 and five Phase 2 trials totaling over 440 patients for inflammatory and oncology indications, and had demonstrated promising evidence of tolerability,

pharmacokinetics, durability, and target engagement.

Ocuphire initiated enrollment for the Phase 2 trial (ZETA-1) for APX3330 in April 2021 for the treatment of patients with DR, including moderately severe non-proliferative DR (“NPDR”) and mild

proliferative DR (“PDR”), as well as patients with DME without loss of central vision.

Top-line data for this study are expected to be reported in 2022.

Ocuphire has also in-licensed APX2009 and APX2014, which are additional second-generation

product candidates and analogs of APX3330.

Food and Drug Administration (“FDA”) in late 2022 under

the 505(b)(2) pathway.

Ocuphire’s second product candidate, APX3330, is a twice-a-day oral tablet designed to target multiple pathways relevant to retinal and choroidal

(the vascular layer of the eye) vascular diseases such as diabetic retinopathy (“DR”) and diabetic macular edema (“DME”) which, if left untreated, can result in permanent visual acuity loss and eventual blindness.

DR is a disease resulting from

diabetes in which chronically elevated blood sugar levels cause progressive damage to blood vessels in the retina.

DME is a severe form of DR which involves leakage of protein and fluid into the macula, the central portion of the retina, causing

swelling and damage.

Prior to Ocuphire’s in-licensing of the product candidate, APX3330 had been studied by third parties in six Phase 1 and five Phase 2 trials enrolling over 440 patients with more than 340 patients treated with APX3330 for

inflammatory and oncology indications.

These trials have demonstrated promising evidence of tolerability, pharmacokinetics, durability, and target engagement.

Ocuphire initiated enrollment for the Phase 2 trial (ZETA-1) for APX3330 in April 2021

for the treatment of patients with moderately severe non-proliferative DR (“NPDR”) or mild proliferative DR (“PDR”).

Top-line data for this study are expected to be reported in the second half of 2022.

Ocuphire has also in-licensed APX2009 and

APX2014, which are additional second-generation product candidates and analogs of APX3330.

Ocuphire Pharma, Inc.

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guidance under Accounting Standards Update (“ASU”) 2017-01, the Merger was accounted for as an asset acquisition.

Accordingly, the assets and liabilities of Rexahn were recorded as of the Closing at the purchase price of the accounting acquirer,

Accordingly, the assets and liabilities of Rexahn were recorded as of the closing of the Merger at the purchase price of the

accounting acquirer, Ocuphire.

Ocuphire allocated the total purchase price among the individual assets acquired on a fair value basis or carrying value as appropriate.

A final determination of these estimated fair values was based on the actual net tangible assets of

Rexahn that existed as of the date of the completion of the transaction.

As of the Closing , the net assets of Rexahn were recorded at their acquisition-date relative fair values in the consolidated financial

statements of Ocuphire and the reported operating results prior to the Merger are those of Private Ocuphire.

A final determination of these estimated fair values was based on the actual net

tangible assets of Rexahn that existed as of the date of the completion of the transaction.

As of the Closing , the net assets of Rexahn were recorded at their acquisition-date relative fair values in the

consolidated financial statements of Ocuphire and the reported operating results prior to the Merger are those of Private Ocuphire.

Pursuant to the Merger Agreement, the number of shares of common stock issued to Private Ocuphire’s stockholders for each share of Ocuphire’s common stock outstanding immediately prior to the

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financings as well as collaborations, strategic alliances and licensing arrangements.

Through June 30, 2021, Ocuphire has funded its operations primarily through equity financings that totaled $40.2 million in gross proceeds, of which $21.15

Through September 30, 2021, Ocuphire has funded its operations primarily through equity financings that totaled $41.9 million in gross proceeds, of which $21.15

million was received in connection with the Merger, net cash at Rexahn, a minor amount of license fee payments earned under license agreements related to Rexahn’s RX-3117 drug compound, and through the issuance of convertible notes in private

placements that totaled $8.5 million in gross proceeds.

Ocuphire’s net losses were $46.2 million and $4.7 million for the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, Ocuphire had an accumulated deficit of $78.8

Ocuphire’s net losses were $50.4 million and $5.9 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, Ocuphire had an accumulated deficit of

$83.1 million.

Ocuphire anticipates that its expenses will increase substantially as it:

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Clinical and CMC Milestones

In June, the Company announced successful results from the VEGA-1 Phase 2 trial of Nyxol plus low-dose pilocarpine (LDP) for the

treatment of presbyopia.

The trial met its primary endpoint of 3 lines of near vision improvement and multiple key secondary endpoints such as fast onset of action and durability with statistical significance and a favorable safety profile

(including no headaches).

In the quarter, the Company also submitted an EOP2 CMC Meeting request and received formal guidance from the FDA for the 0.75% Nyxol

preservative-free, blow-filled-seal commercial product.

With the resurgence of COVID-19 cases, Ocuphire may likely continue to experience disruptions in its manufacturing, supply chain,

research and development operations, clinical enrollment, regulatory process, financial position, and financing terms.

As of September 30, 2021, three registration stability batches at the 50 L scale of Nyxol (0.75% Phentolamine

Mesylate Ophthalmic Solution) were manufactured under cGMP conditions.

One clinical stability batch of Placebo (Nyxol vehicle) was manufactured and packaged in a matching container closure configuration.

These manufacturing campaigns were

important corporate milestones because this material will be used in future Phase 3 clinical trials.

Additionally, the product has been placed on an ICH Stability program for a 36-month duration.

The body of data including the 12-month stability

data from the three Nyxol manufacturing campaigns and stability programs will be used to support the planned Nyxol NDA submission for Reversal of Mydriasis in late 2022.

The planned six-month preclinical toxicology study in rabbits for chronic use related to Nyxol has been completed.

Reports will be finalized and submitted to the FDA in the first half of 2022.

Regulatory Update

Ocuphire has submitted a Pediatric Investigation Plan for Nyxol which has been reviewed by the FDA.

With the resurgence of COVID-19 cases, Ocuphire may likely continue to experience disruptions in its manufacturing, supply chain, research and development operations, clinical enrollment,

regulatory process, as well as impacts to financial position and difficulties in obtaining more favorable financing terms.

The global outbreak of COVID-19 continues to rapidly evolve.

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impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on Ocuphire’s results of future operations, financial position, and liquidity over the next 12 or more months.

Change of Transfer Agent

Effective April 9, 2021, the Company appointed American Stock Transfer & Trust Company, LLC (“AST”) as its transfer agent and registrar.

All of the Company’s registered shares of common

stock were transferred from Olde Monmouth Stock Transfer Co.

Financial Operations Overview

Collaborations Revenue

Collaborations revenue to date was derived from fees earned from a license agreement with BioSense Global LLC (“BioSense”) in connection with the Rexahn

RX-3117 drug compound.

We anticipate that we may earn additional revenues stemming from additional milestone and royalty payments from this or other related license agreements related to Rexahn’s legacy drug compounds;

however, the attainment of

milestones or level of sales required to earn royalty payments is highly uncertain.

Collaborations revenue to date was derived from fees earned from a license agreement with BioSense Global LLC (“BioSense”) and Processa Pharmaceuticals, Inc.

(“Processa”) in connection with the Rexahn RX-3117 drug compound.

We anticipate that we may earn additional revenues stemming from additional milestone and royalty payments from this or other license

agreements related to Rexahn’s legacy drug compounds;

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 limited collaborations revenue referenced above, Ocuphire does not expect to generate significant revenue unless or until it obtains regulatory approval of and

commercializes Nyxol or APX3330.

If Ocuphire fails to complete the development of Nyxol, APX3330, or any other product candidate it may pursue in the future, in a timely manner, or fails to obtain regulatory approval, Ocuphire’s ability to

generate future revenue would be compromised.

future revenue would be compromised.

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, and other services provided by business consultants.

Ocuphire anticipates that its general and administrative expenses will significantly increase in the future to support its continued research

and development activities and costs associated with operating as a public company.

These increases will include increased costs related to the hiring of additional personnel and fees for legal and professional services as well as other

public-company related costs.

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, and other services provided by business consultants.

Ocuphire anticipates that its general and administrative expenses will significantly increase in the future to support its continued research and development

activities and costs associated with operating as a public company.

These increases will include increased costs related to the hiring of additional personnel and fees for legal and professional services as well as other public-company related

Ocuphire Pharma, Inc.

Research and Development Expenses

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Ocuphire expects its research and development expenses to significantly increase over the next several years.

However, it is difficult for Ocuphire

to determine with certainty the duration, costs and timing to complete its current or future preclinical programs and clinical trials of Nyxol, APX3330, and other product candidates.

The duration, costs and timing of clinical trials and

development of Nyxol, APX3330 and other product candidates will depend on a variety of factors that include, but are not limited to, the following:

Ocuphire Pharma, Inc.

However, it is difficult for Ocuphire to

determine with certainty the duration, costs and timing to complete its current or future preclinical programs and clinical trials of Nyxol, APX3330, and other product candidates.

The duration, costs and timing of clinical trials and development of

Nyxol, APX3330 and other product candidates will depend on a variety of factors that include, but are not limited to, the following:

per patient trial costs;

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Ocuphire includes costs to acquire or in-license product candidates as acquired in-process research and development expenses.

These costs are immediately expensed provided that the payments do

not also represent processes or activities that would constitute a “business” as defined under accounting standards generally accepted in the United States of America (“U.S.

GAAP”) or provided that the product candidate has not achieved

regulatory approval for marketing and, absent obtaining such approval, has no alternative future use.

These costs are immediately expensed provided that the payments do not

also represent processes or activities that would constitute a “business” as defined under accounting standards generally accepted in the United States of America (“U.S.

GAAP”) or provided that the product candidate has not achieved regulatory

approval for marketing and, absent obtaining such approval, has no alternative future use.

Royalties owed on future sales of any licensed product will be expensed in the period the related revenues are recognized.

The costs associated

with the Merger and the Apexian Sublicense Agreement were recorded as acquired in-process research and development expenses (“IPR&D”).

The costs associated with the

Merger and the Apexian Sublicense Agreement were recorded as acquired in-process research and development expenses (“IPR&D”).

Interest Expense

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The Ocuphire convertible notes had an annual interest rate of 8%.

Fair Value Change in Derivative and Warrant Liabilities

The fair value change in derivative and warrant liabilities includes the change in the fair value of the warrant liabilities and the premium conversion derivatives during the period the premium

conversion derivatives and warrant liabilities are outstanding.

Other income includes interest earned from cash and cash equivalent investments and reimbursements in connection with grants and other sources.

Fair Value Change in Warrant Liabilities and Premium Conversion Derivatives

The fair value change in warrant liabilities and premium conversion derivatives includes the change in the fair value of the warrant liabilities and the premium conversion derivatives during the

period the premium conversion derivatives and warrant liabilities are outstanding.

Other Income, net

Other income, net 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.

Other expense reflected in this line item includes payments made by us in connection with the Contingent Value Rights Agreement (the “CVR Agreement”) with former Rexahn shareholders.

Ocuphire Pharma, Inc.

Provision for Income Taxes

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Currently, there is no provision for income taxes, as Ocuphire has incurred

operating losses to date, and a full valuation allowance has been provided on the net deferred tax assets as of June 30, 2021 and December 31, 2020.

Ocuphire Pharma, Inc.

operating losses to date, and a full valuation allowance has been provided on the net deferred tax assets as of September 30, 2021 and December 31, 2020.

Results of Operations

Comparison of the Three Months Ended June 30, 2021 and 2020

Comparison of the Three Months Ended September 30, 2021 and 2020

The following table summarizes Ocuphire’s operating results for the periods indicated (in thousands):

For the Three Months Ended

September 30,

Collaborations revenue

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Fair value change in warrant liabilities and premium conversion derivatives

Gain on note extinguishment

Other income, net

Loss before income taxes

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Collaborations Revenue

Collaborations revenue was $0.1 million for the three months ended June 30, 2021.

Revenue during the period was derived from the license agreement with BioSense related to certain technology

Collaborations revenue was $0.5 million for the three months ended September 30, 2021.

Revenue during the period was derived from the collaboration and license agreement with Processa related to

certain technology transfers.

There was no collaborations revenue recognized during the comparable prior year period.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2021 were $3.4 million compared to $0.6 million for the

three months ended June 30, 2020.

The $2.9 million increase was attributable to an increase primarily in administrative employee headcount, stock-based compensation, insurance, legal and settlement costs, and costs associated with operating as

a public company subsequent to the reverse merger in the current period.

General and administrative expenses included $0.3 million and $0.2 million in stock-based compensation expense during the three months ended June 30, 2021 and 2020,

respectively.

General and administrative expenses for the three months ended September 30, 2021 were $1.6 million compared to $0.6 million for the three months

ended September 30, 2020.

The $1.0 million increase was primarily attributable to administrative employee headcount, stock-based compensation, insurance, legal costs, and costs associated with operating as a public company subsequent to the

reverse merger in the current period.

General and administrative expenses included $0.3 million and $0.2 million in stock-based compensation expense during the three months ended September 30, 2021 and 2020, respectively.

Research and Development Expenses

Research and development expenses for the three months ended June 30, 2021 were $3.8 million compared to $0.7 million for the three months ended June 30, 2020.

The $3.1 million increase was

primarily attributable to four new clinical trials and manufacturing activities for Nyxol and APX3330 as well as regulatory, preclinical and other development activities.

Research and development expenses also included $0.2 million in stock-based

compensation expense during the three months ended June 30, 2021 and 2020.

Research and development expenses for the three months ended September 30, 2021 were $3.1 million compared to $1.4 million for the three months ended September 30, 2020.

The $1.7 million increase

was primarily attributable to four new clinical trials and manufacturing activities for Nyxol and APX3330 as well as regulatory, preclinical and other development activities.

Research and development expenses also included $0.2 million and $0.4

million in stock-based compensation expense during the three months ended September 30, 2021 and 2020, respectively.

Interest Expense

Non-cash interest expense for the three months ended June 30, 2020 of $0.7 million was comprised of interest on principal and amortization of debt discounts related to Ocuphire convertible notes.

interest expense during the current year period.

Non-cash interest expense for the three months ended September 30, 2020 of $0.2 million was comprised of interest on principal and amortization of debt discounts related to Ocuphire convertible

There was no interest expense during the current year period.

Fair Value Change in Warrant Liabilities and Premium Conversion Derivatives

The fair value change in warrant liabilities and premium conversion derivatives was an expense of $0.9 million for the three months ended June 30, 2020 attributed to the change in fair value for the premium

conversion derivatives due primarily to fluctuations in the fair value of Ocuphire common stock and the number of potential shares of common stock issuable upon conversion of the underlying Ocuphire convertible notes that were outstanding during

The fair value change in warrant liabilities and premium conversion derivatives during the three months ended June 30, 2021 was under $1,000, related to Rexahn Warrants.

Gain on Note Extinguishment

Non-cash gain on note extinguishment for the three months ended June 30, 2020 was $1.3 million as a result of the Note Conversion Agreement (as defined and further described below).

Conversion Agreement was deemed to be a substantial modification to the Ocuphire convertible notes (as defined below), and as such, the Company recorded the modification as a note extinguishment.

There were no convertible notes outstanding during

the three month period ended June 30, 2021.

The fair value change in warrant liabilities and premium conversion derivatives was an expense of $0.9 million for the three months ended September 30, 2020 attributed to the change in fair value

for the premium conversion derivatives due primarily to fluctuations in the fair value of Ocuphire common stock and the number of potential shares of common stock issuable upon conversion of the underlying Ocuphire convertible notes that were

outstanding during the period.

The fair value change in warrant liabilities and premium conversion derivatives during the three months ended September 30, 2021 was under $1,000, related to Rexahn Warrants.

Ocuphire Pharma, Inc.

During the three months ended June 30, 2021 and 2020, Ocuphire had other income of $1,000 and $6,000, re spectively.

Other income during the three months ended June 30, 2021

consisted primarily of interest income from our cash and cash equivalent investments.

Other income during the three months ended June 30, 2020 consisted of interest income from our cash and cash equivalent deposits of $2,000 and $4,000 received

from a grant from the U.S.

Small Business Administration for economic relief stemming from the COVID-19 pandemic.

Comparison of the Six Months Ended June 30, 2021 and 2020

Other Income, net

Other income during the three months ended September 30, 2021 consisted primarily of unrealized gains from our short-term investments and to a lesser extent interest income from our cash and cash

equivalent investments in the aggregate of $94,000.

Other income during the three months ended September 30, 2020 was negligible.

During the three months ended September 30, 2021, Ocuphire had other expense of $92,000 stemming largely from payments due in connection with the CVR Agreement.

Other expense during the three

months ended September 31, 2020 was negligible.

Comparison of the Nine Months Ended September 30, 2021 and 2020

The following table summarizes Ocuphire’s operating results for the periods indicated (in thousands):

For the Six Months Ended

For the Nine Months Ended

September 30,

Collaborations revenue

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Gain on note extinguishment

Other income, net

Loss before income taxes

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Collaborations Revenue

Collaborations revenue was $0.1 million for the six months ended June 30, 2021.

Revenue during the period was derived from the license agreement with BioSense related to certain technology

There was no collaborations revenue recognized during six months ended June 30, 2020.

Collaborations revenue was $0.6 million for the nine months ended September 30, 2021.

Revenue during the period was derived from the collaboration and license agreements with Processa and BioSense

related to certain technology transfers.

There was no collaborations revenue recognized during nine months ended September 30, 2020.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2021 were $5.1 million compared to $0.9 million for the six

months ended June 30, 2020.

The $4.2 million increase was attributable to an increase primarily in administrative employee headcount, stock-based compensation, professional services, insurance, legal and settlement costs, and costs associated

with operating as a public company subsequent to the reverse merger in the current period.

General and administrative expenses included $0.5 million and $0.2 million in stock-based compensation expense during the six months ended June 30, 2021

and 2020, respectively.

General and administrative expenses for the nine months ended September 30, 2021 were $6.7 million compared to $1.5 million for the nine months

ended September 30, 2020.

The $5.2 million increase was primarily attributable to administrative employee headcount, stock-based compensation, professional services, insurance, legal and settlement costs, and costs associated with operating as a

public company subsequent to the reverse merger in the current period.

General and administrative expenses included $0.8 million and $0.4 million in stock-based compensation expense during the nine months ended September 30, 2021 and 2020,

respectively.

Research and Development Expenses

Research and development expenses for the six months ended June 30, 2021 were $7.3 million compared to $0.9 million for the six months ended June 30, 2020.

The $6.4 million increase was primarily

attributable to four new clinical trials and manufacturing activities for Nyxol and APX3330 as well as regulatory, preclinical and other development activities.

Research and development expenses also included $0.5 million and $0.2 million in

stock-based compensation expense during the six months ended June 30, 2021 and 2020, respectively.

Research and development expenses for the nine months ended September 30, 2021 were $10.4 million compared to $2.3 million for the nine months ended September 30, 2020.

The $8.1 million increase

was primarily attributable to six new clinical trials and manufacturing activities for Nyxol and APX3330 as well as regulatory, preclinical and other development activities.

Research and development expenses also included $0.6 million in

stock-based compensation expense during the nine months ended September 30, 2021 and 2020.

Acquired In-Process Research and Development Expenses

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The fair value of the common stock issued to Apexian was $2.1 million and was

recorded as IPR&D expense during the six months ended June 30, 2020.

recorded as IPR&D expense during the nine months ended September 30, 2020.

Accounting standards require that the fair value of IPR&D with no alternative future use be charged to expense on the acquisition date.

There were no IPR&D costs in

the current year period.

Interest Expense

Non-cash interest expense for the six months ended June 30, 2020 of $1.2 million was comprised of interest on principal and amortization of debt discounts related to Ocuphire convertible notes.

There was no interest

expense during the current year period.

There were no IPR&D

costs in the current year period.

Ocuphire Pharma, Inc.

Interest Expense

Non-cash interest expense for the nine months ended September 30, 2020 of $1.4 million was comprised of interest on principal and amortization of debt discounts related to Ocuphire convertible

There was no interest expense during the current year period.

Fair Value Change in Warrant Liabilities and Premium Conversion Derivatives

The fair value change in warrant liabilities and premium conversion derivatives was an expense of $33.8 million for the six months ended June 30, 2021 compared to an expense of $0.7 million for

the six months ended June 30, 2020.

The $33.1 million change was due primarily to the issuance of the Series A Warrants in connection with the Pre-Merger Financing in November 2020 and to the fluctuations in Ocuphire’s common stock fair value and

the number of potential shares of common stock issuable upon conversion of the underlying Ocuphire warrant liabilities and convertible notes that were outstanding during the relevant periods.

Upon the February 3, 2021 effective date of the Waiver

Agreements, the Series A Warrants were reclassified to equity and are no longer subject to remeasurement.

The fair value change in warrant liabilities and premium conversion derivatives was an expense of $33.8 million for the nine months ended September 30, 2021 compared to a benefit of $0.2 million

for the nine months ended September 30, 2020.

The $34.0 million change was due primarily to the issuance of the Series A Warrants in connection with the Pre-Merger Financing in November 2020 and to the fluctuations in Ocuphire’s common stock fair

value and the number of potential shares of common stock issuable upon conversion of the underlying Ocuphire warrant liabilities and convertible notes that were outstanding during the relevant periods.

Upon the February 3, 2021 effective date of

the Waiver Agreements, the Series A Warrants were reclassified to equity and are no longer subject to remeasurement.

Gain on Note Extinguishment

Non-cash gain on note extinguishment for the six months ended June 30, 2020 was $1.3 million as a result of the Note Conversion Agreement (as defined and further described below).

The Note Conversion Agreement was

deemed to be a substantial modification to the Ocuphire convertible notes (as defined below), and as such, the Company recorded the modification as a note extinguishment.

During the six months ended June 30, 2021 and 2020, Ocuphire had other income of $2,000 and $9,000, respectively.

Other income during the six months ended June 30, 2021

consisted of primarily of interest income from our cash and cash equivalent investments.

Other income during the six months ended June 30, 2020 consisted of interest income from our cash and cash equivalent investments of $5,000 and $4,000

received from a grant from the U.S.

Non-cash gain on note extinguishment for the nine months ended September 30, 2020 was $1.3 million as a result of the Note Conversion Agreement (as defined and further described below).

Conversion Agreement was deemed to be a substantial modification to the Ocuphire convertible notes (as defined below), and as such, the Company recorded the modification as a note extinguishment.

Other Income, net

Other income during the nine months ended September 30, 2021 and 2020 was $96,000 and $9,000, respectively.

Other income consisted primarily of unrealized gains from our short-term investments and

to a lesser extent interest income from our cash and cash equivalent investments during the nine months ended September 30, 2021.

During the nine months ended September 30, 2020, Ocuphire had other income from cash and cash equivalent investments

and from a grant received from the U.S.

Small Business Administration for economic relief stemming from the COVID-19 pandemic.

During the nine months ended September 30, 2021, Ocuphire had other expense of $92,000 stemming largely from payments due in connection with the CVR Agreement.

Other expense during the nine months

ended September 31, 2020 was negligible.

Liquidity and Capital Resources

Capital Resources

As of June 30, 2021, Ocuphire’s principal sources of liquidity consisted of cash and cash equivalents of $24.2 million.

As of September 30, 2021, Ocuphire’s principal sources of liquidity consisted of cash and cash equivalents of $22.2 million.

Ocuphire’s cash and cash equivalents are invested primarily in cash

deposits at a large, long-standing financial institution.

deposits at a large, long-standing financial institutions.

Ocuphire has not generated any revenue and anticipates that it will continue to incur losses for the foreseeable future.

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continues to operate as a public company.

Ocuphire Pharma, Inc.

Historical Capital Resources

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On June 4, 2021, the Company 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 of an aggregate of 3,076,923 shares of the Company’s common stock and warrants to purchase 1,538,461 shares of the Company’s common stock (the “RDO Warrants”) at an offering price of $4.875 per one Share and 0.50 RDO Warrants, for gross

proceeds of approximately $15,000,000, before deducting AGP’s fees and related offering expenses in the amount of approximately $1.1 million.

The purchase agreement contains customary representations, warranties and agreements by the Company,

customary conditions to closing, indemnification obligations of the Company, other obligations of the parties and termination provisions.

Ocuphire Pharma, Inc.

The RDO Warrants have an exercise price of $6.09 per share and 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 the Company, the holder may increase or decrease the beneficial ownership limitation, provided further that in no event shall the beneficial ownership limitation exceed 9.99%.

Pursuant to the terms of the placement agency agreement,

AGP on June 8, 2021, sold of an aggregate of 3,076,923 shares of the Company’s common stock and warrants to purchase 1,538,461 shares of the Company’s common stock (the “RDO Warrants”) at an offering price of $4.875 per one Share and 0.50 RDO

Warrants, for gross proceeds of approximately $15,000,000, before deducting AGP’s fees and related offering expenses in the amount of approximately $1.1 million.

The purchase agreement contains customary representations, warranties and agreements

by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties and termination provisions.

The RDO Warrants have an exercise price of $6.09 per share and 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;

however, that upon prior notice to the Company, 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 September 30, 2021,

1,538,461 RDO Warrants were still outstanding.

The offering of the Securities was made pursuant to the Company’s effective shelf registration statement on Form S-3.

At-The-Market Program

On February 4, 2021, Ocuphire 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 its sole discretion, securities having an aggregate offering price of up to $125 million.

In connection with the 2021 Shelf, on March 11, 2021, Ocuphire entered into a Capital on

Demand TM Sales Agreement with JonesTrading Institutional Services LLC (“JonesTrading”) under which the Company may offer and sell, from time to time at its sole

discretion, to or through JonesTrading, acting as agent and/or principal, shares of its common stock having an aggregate offering price of up to $40 million (the “2021 ATM”).

During the three and six months ended June 30, 2021, 900,943 shares

were sold under the 2021 ATM for gross proceeds in the amount of approximately $4.1 million.

On February 4, 2021, Ocuphire 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 its sole discretion, securities having an aggregate offering price of up to $125 million.

In connection with the 2021 Shelf, on March 11, 2021, Ocuphire entered into a Capital on Demand TM Sales Agreement with JonesTrading Institutional Services LLC (“JonesTrading”) under which the Company may offer and sell, from time to time at its sole discretion, to

or through JonesTrading, acting as agent and/or principal, shares of its common stock having an aggregate offering price of up to $40 million (the “2021 ATM”).

During the three and nine months ended September 30, 2021, 332,600 shares and 1,233,543

shares were sold under the 2021 ATM, respectively, for gross proceeds in the amount of approximately $1.7 million and $5.8 million, respectively.

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 Private Ocuphire 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 Private Ocuphire common stock (the “Initial Shares”) which converted pursuant to the exchange ratio in the

Merger into an aggregate of approximately 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 Private Ocuphire common stock (the

“Additional Shares”) which converted pursuant to the exchange ratio in the Merger into an aggregate of approximately 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) the Company 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.

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”).

Merger (the “Pre-Merger Financing”).

into an aggregate of approximately 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 Private Ocuphire common stock (the “Additional

Shares”) which converted pursuant to the exchange ratio in the Merger into an aggregate of approximately 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) the Company 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

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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).

Ocuphire Pharma, Inc.

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.

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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, 2021, 5,665,838 Series A Warrants were still

As of September 30, 2021, 5,665,838 Series A Warrants were still

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

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provisions are no longer in effect.

Ocuphire Pharma, Inc.

Series B Warrants

The Series B Warrants have an exercise price of $0.0001, were exercisable upon issuance and will expire on the day following the later to occur of (i) the Reservation Date (as defined therein),

and (ii) the date on which the investor’s Series B Warrants have been exercised in full (without giving effect to any limitation on exercise contained therein) and no shares remain issuable thereunder.

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 1,708,334 shares of Common Stock upon execution of the Waiver

As of June 30, 2021, 78,700 Series B Warrants were still 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.

The Series B Warrants have an exercise price of $0.0001, were exercisable upon issuance and will expire on the day following the later to occur of (i) the Reservation Date (as defined therein), and

(ii) the date on which the investor’s Series B Warrants have been exercised in full (without giving effect to any limitation on exercise contained therein) and no shares remain issuable thereunder.

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 1,708,334 shares of Common Stock upon execution of the Waiver Agreements.

September 30, 2021, 78,700 Series B Warrants were still 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 are no longer in effect.

Ocuphire Convertible Notes

From May 2018 through March 2020, Ocuphire issued convertible notes (the “Ocuphire convertible notes”) for aggregate gross proceeds of $8.5 million, inclusive of the promissory notes exchanged

for Ocuphire convertible notes.

From May 2018 through March 2020, Ocuphire issued convertible notes (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 note had an interest 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 as adjusted for the Exchange Ratio in connection with the completion of the Merger.

On November 4, 2020, all

of Ocuphire’s outstanding notes were converted into 977,128 shares of Ocuphire common stock as adjusted for the Exchange Ratio in connection with the completion of the Merger.

The original Convertible Note Purchase Agreement (the “Note Purchase Agreement”) was dated May 25, 2018.

Under the original terms of the Note Purchase Agreement, the Ocuphire convertible notes

were payable on demand on July 31, 2019 unless converted earlier pursuant to their terms.

Such conversion would automatically occur if Ocuphire (i) completed an initial public offering (“IPO”), (ii) completed a change in control (“CIC”), (iii)

completed a sale and issuance of its capital stock resulting in gross proceeds to Ocuphire of at least $5.0 million (“Qualified Financing”), or (iv) completed a reverse merger transaction (“Reverse Merger”), each a “Conversion Event”.

Conversion Event, the Ocuphire convertible notes would have automatically converted into the following:

Under the original terms of the Note Purchase Agreement, the Ocuphire convertible notes were

payable on demand on July 31, 2019 unless converted earlier pursuant to their terms.

Such conversion would automatically occur if Ocuphire (i) completed an initial public offering (“IPO”), (ii) completed a change in control (“CIC”), (iii) completed

a sale and issuance of its capital stock resulting in gross proceeds to Ocuphire of at least $5.0 million (“Qualified Financing”), or (iv) completed a reverse merger transaction (“Reverse Merger”), each a “Conversion Event”.

Upon a Conversion

Event, the Ocuphire convertible notes would have automatically converted into the following:

Qualified Financing or IPO:

An amount of shares of Ocuphire common stock equal to 135% of the Note Value divided by the per share price of Ocuphire

common stock issued to purchasers in the Qualified Financing or IPO.

An amount of shares of Ocuphire common stock equal to 135% of the Note Value divided by the per share price of Ocuphire common

stock issued to purchasers in the Qualified Financing or IPO.

An amount of shares of Ocuphire common stock equal to 200% of the Note Value divided by the per share price of Ocuphire common stock based on the

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Reverse Merger:

Either (i) shares of Ocuphire common stock issued in the Reverse Merger or (ii) equity securities of the Reverse Merger counterparty, in an amount equal to 135% of the Note Value

divided by the per share price at which such shares were issued to either stockholders of Ocuphire or stockholders of the Reverse Merger counterparty.

Either (i) shares of Ocuphire common stock issued in the Reverse Merger or (ii) equity securities of the Reverse Merger counterparty, in an amount equal to 135% of the Note Value divided by the per share price at which such shares were issued to either stockholders of Ocuphire or stockholders of the Reverse Merger counterparty.

The Note Purchase Agreement was amended and restated on January 22, 2019 (the “Amended and Restated Mezz Note Purchase Agreement”).

Under the Amended and Restated Mezz Note Purchase Agreement,

the demand date of the Ocuphire convertible notes was extended to December 31, 2019 and the conversion provisions under the Ocuphire convertible notes were restated such that, upon a Conversion Event, the Ocuphire convertible notes would have

Under the Amended and Restated Mezz Note Purchase Agreement, the

demand date of the Ocuphire convertible notes was extended to December 31, 2019 and the conversion provisions under the Ocuphire convertible notes were restated such that, upon a Conversion Event, the Ocuphire convertible notes would have

automatically converted into the following:

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stock issued to purchasers in the IPO, and (ii) 100% of the Note Value divided by the per share price of $10.37.

Ocuphire Pharma, Inc.

An amount of shares of Ocuphire common stock equal to the greater of:

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Qualified Financing :

An amount of shares of Ocuphire common stock equal to 150% of the Note Value divided by the per share price of Ocuphire common

stock issued to purchasers in the Qualified Financing.

An amount of shares of Ocuphire common stock equal to 150% of the Note Value divided by the per share price of Ocuphire common stock

issued to purchasers in the Qualified Financing.

Reverse Merger :

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Note Value divided by the per share price at which such shares were issued to either stockholders of Ocuphire or stockholders of the Reverse Merger counterparty, and (ii) 100% Note Value divided by the per share price of $10.37.

Ocuphire Pharma, Inc.

The Amended and Restated Mezz Note Purchase Agreement was further amended on November 20, 2019 (the “First Amendment”).

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convertible notes from December 31, 2019 to September 30, 2020, and changed the basis of interest from a 360-day year, 30-day month basis to a 365-day year basis.

In addition, the First Amendment increased the automatic conversion factor applied

to the Note Value to 175% in the event of an IPO, Qualified Financing or Reverse Merger and removed the fixed conversion option provision of $10.37 per share in the event of an IPO, CIC or Reverse Merger.

In addition, the First Amendment increased the automatic conversion factor applied to

the Note Value to 175% in the event of an IPO, Qualified Financing or Reverse Merger and removed the fixed conversion option provision of $10.37 per share in the event of an IPO, CIC or Reverse Merger.

On June 8, 2020, holders of the Ocuphire convertible notes entered into the Note Conversion Agreement with Ocuphire (the “Note Conversion Agreement”).

The Note Conversion Agreement provided that

prior to the consummation of the merger, following the Rexahn special meeting, all of the Ocuphire convertible notes would automatically convert into an amount of shares of Ocuphire common stock equal to 175% of the Note Value divided by the

Fully Diluted Shares.

Diluted Shares.

“Fully Diluted Shares” for this purpose means as of the Conversion Date the sum of the following:

(1) all of the issued outstanding shares of Ocuphire common stock;

and (2) the aggregate number of shares of Ocuphire common

stock reserved for issuance under all outstanding options or other awards under equity incentive plans of Ocuphire in effect as of the date of conversion.

and (2) the aggregate number of shares of Ocuphire common stock

reserved for issuance under all outstanding options or other awards under equity incentive plans of Ocuphire in effect as of the date of conversion.

The Note Conversion Agreement further provided that upon the issuance of shares of Ocuphire common stock in the conversion, each convertible note would be cancelled and extinguished without the

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The following table summarizes Ocuphire’s cash flows for the periods indicated (in thousands):

For the Six Months Ended

For the Nine Months Ended

September 30,

Net cash used in operating activities

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Cash Flow from Operating Activities

For the six months ended June 30, 2021, cash used in operating activities of $10.1 million was attributable to a net loss of $46.2 million, partially offset by $36.4 million in non-cash operating

expenses and a net change of $(0.4) million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted of the fair value change in the warrant liabilities of $33.8 million, a share settlement with certain investors in the

amount of $1.6 million, stock-based compensation of $1.0 million and depreciation expense of $2,000.

The change in operating assets and liabilities was primarily attributable to a decrease in Ocuphire’s accrued liabilities, on net basis, offset

in part by a decrease in prepaid expenses and an increase in accounts receivable associated with the fluctuations of Ocuphire’s operating expenses and in connection with operating as a public company post-Merger.

For the six months ended June 30, 2020, cash used in operating activities of $1.4 million was attributable to a net loss of $4.7 million, partially offset by $3.2 million in non-cash expenses and

a net change of $0.1 million in Ocuphire’s net operating assets and liabilities.

For the nine months ended September 30, 2021, cash used in operating activities of $13.7 million was attributable to a net loss of $50.4 million, partially offset by $36.5 million in non-cash

operating expenses and a net change of $0.2 million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted of the fair value change in the warrant liabilities of $33.8 million, a share settlement with certain investors

in the amount of $1.6 million, stock-based compensation of $1.4 million, non-cash impact from the receipt of common stock stemming from the fulfillment of revenue milestones ($0.4) million and depreciation expense of $3,000.

The change in operating

assets and liabilities was primarily attributable to a decrease in Ocuphire’s prepaid expenses offset in part by a net decrease in accrued liabilities in connection with operating as a public company post-Merger.

For the nine months ended September 30, 2020, cash used in operating activities of $2.4 million was attributable to a net loss of $5.9 million, partially offset by $3.1 million in non-cash expenses

and a net change of $0.4 million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted of the fair value of common shares issued related to IPR&D in the amount of $2.1 million, interest and discount amortization

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stock-based compensation and depreciation expense of $7,000.

The change in operating assets and liabilities was primarily attributable to a decrease in prepaid expenses offset partially by a net decrease in accounts payable and accrued expenses

associated with the fluctuations of Ocuphire’s operating expenses.

The change in operating assets and liabilities was primarily attributable to a decrease in prepaid expenses and increase in accounts payable and accrued expenses associated with the

fluctuations of Ocuphire’s operating expenses.

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, 2021 was $18.0 million in connection with proceeds received from both the Registered Direct Offering and 2021 ATM

net of issuance costs.

Net cash provided by financing activities during the six months ended June 30, 2020 was $0.7 million consisting of proceeds from the issuance of the Ocuphire convertible notes, offset partially

by deferred offering costs of $0.1 million.

Ocuphire Pharma, Inc.

Cash Flow from Financing Activities

Net cash provided by financing activities during the nine months ended September 30, 2021 was $19.6 million in connection with proceeds received from both the Registered Direct Offering and 2021

ATM, net of issuance costs, and to a much lesser extent proceeds in connection with the exercise of stock options.

Net cash provided by financing activities during the nine months ended September 30, 2020 was $1.6 million consisting of proceeds from the issuance of the Ocuphire convertible notes, offset

partially by deferred offering costs of $0.1 million.

Liquidity and Capital Resource Requirements

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Ocuphire does not have any committed external source of funds.

To the extent that Ocuphire raises additional capital through the sale of equity

or convertible debt securities, the ownership interest of Ocuphire’s 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

To the extent that Ocuphire raises additional capital through the sale of equity or

convertible debt securities, the ownership interest of Ocuphire’s 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 Ocuphire’s ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If Ocuphire raises additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, Ocuphire may have to relinquish valuable rights to its technologies, future revenue streams or grant licenses

on terms that may not be favorable to Ocuphire.

If Ocuphire is unable to raise additional funds through equity or debt financings or through collaborations, strategic alliances or licensing arrangements when needed, Ocuphire may be required to

delay, limit, reduce or terminate its product development, future commercialization efforts, or grant rights to develop and market its product candidates that Ocuphire would otherwise prefer to develop and market itself.

raises additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, Ocuphire may have to relinquish valuable rights to its technologies, future revenue streams or grant licenses on terms that

may not be favorable to Ocuphire.

If Ocuphire is unable to raise additional funds through equity or debt financings or through collaborations, strategic alliances or licensing arrangements when needed, Ocuphire may be required to delay, limit,

reduce or terminate its product development, future commercialization efforts, or grant rights to develop and market its product candidates that Ocuphire would otherwise prefer to develop and market itself.

Future Capital Requirements

Ocuphire’s independent registered public accounting firm included an explanatory paragraph in its report on Ocuphire’s financial statements as of and for the years ended December 31, 2020 and

2019, noting the existence of substantial doubt about Ocuphire’s ability to continue as a going concern.

This uncertainty arose from management’s review of Ocuphire’s results of operations and financial condition and its conclusion that, based on

Ocuphire’s operating plans, Ocuphire did not have sufficient existing working capital to sustain operations through December 31, 2021.

Since the issuance of the independent registered public accounting firm’s report, Ocuphire has raised $18.0

million, net of offering expenses, through the sale of common stock in the Registered Direct Offering and the 2021 ATM.

To continue to fund operations, Ocuphire will need to raise capital.

Ocuphire may obtain additional financing in the future

through the issuance of common stock, through other equity or debt financings or through collaborations or partnerships with other companies.

Ocuphire 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 Ocuphire’s ability to execute on its business plan.

The development of Nyxol and APX3330 is subject to numerous uncertainties, and Ocuphire has based its operating plans on assumptions that may prove to be substantially different than what

Ocuphire currently anticipates, which could result in cash resources being used sooner than Ocuphire currently expects.

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.

Ocuphire’s independent registered public accounting firm included an explanatory paragraph in its report on

Ocuphire’s financial statements as of and for the years ended December 31, 2020 and 2019, noting the existence of substantial doubt about Ocuphire’s ability to continue as a going concern.

This uncertainty arose from management’s review of

Ocuphire’s results of operations and financial condition and its conclusion that, based on Ocuphire’s operating plans, Ocuphire did not have sufficient existing working capital to sustain operations through December 31, 2021.

Since the issuance

of the independent registered public accounting firm’s report, Ocuphire has raised $19.5 million, net of offering expenses, through the sale of common stock in the Registered Direct Offering and the 2021 ATM.

To continue to fund operations,

Ocuphire will need to raise capital.

Ocuphire may obtain additional financing in the future through the issuance of common stock, through other equity or debt financings or through collaborations or partnerships with other companies.

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 Ocuphire’s ability to execute on its business plan.

The development of Nyxol and APX3330 is subject to numerous uncertainties, and Ocuphire has based its operating plans on assumptions that may prove to be substantially different than what Ocuphire

currently anticipates, which could result in cash resources being used sooner than Ocuphire currently expects.

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.

Ocuphire’s ability to successfully transition to profitability will be dependent upon achieving a level of product sales adequate to support its cost structure.

may not ever achieve profitability or generate positive cash flow from operating activities.

Ocuphire may not ever

achieve profitability or generate positive cash flow from operating activities.

Contractual Obligations and Commitments

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Apexian Sublicense Agreement

On January 21, 2020, Ocuphire entered into the Apexian Sublicense Agreement, pursuant to which it 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 Ocuphire intends to develop as an oral

tablet therapeutic to treat DR and diabetic macular edema, and potentially wet age-related macular degeneration.

On January 21, 2020, Ocuphire entered into the Apexian Sublicense Agreement, pursuant to which it 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 Ocuphire intends to develop as an oral tablet

therapeutic to treat DR and diabetic macular edema, and potentially wet age-related macular degeneration.

In connection with the Apexian Sublicense Agreement, Ocuphire issued 891,422 shares (as adjusted for the Exchange Ratio) of Private Ocuphire common stock to Apexian and certain of Apexian’s

The share issuance transaction was recorded in the amount of $2.1 million as IPR&D expense during the six months ended June 30, 2020 based on the fair market value of the common shares issued since no processes or activities that

would constitute a “business” were acquired and none of the rights and underlying assets acquired had alternative future uses or reached a stage of technological feasibility.

The share issuance transaction was recorded in the amount of $2.1 million as IPR&D expense during the nine months ended September 30, 2020 based on the fair market value of the common shares issued since no processes or activities

that would constitute a “business” were acquired and none of the rights and underlying assets acquired had alternative future uses or reached a stage of technological feasibility.

Ocuphire also paid the balance remaining of $0.4 million of Ref-1

Inhibitor program costs to Apexian following the Company’s listing on a major stock exchange.

Ocuphire Pharma, Inc.

Ocuphire 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 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, which net sales milestone payments are payable once, upon

the first achievement of such milestone.

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, which net sales milestone payments are payable once, upon the

first achievement of such milestone.

Lastly, Ocuphire also agreed to make royalty payments equal to a single-digit percentage of its net sales of products covered by the patents under the Apexian Sublicense Agreement.

milestone or royalty payments were triggered as of the date of this proxy statement/prospectus/information statement.

Ocuphire Pharma, Inc.

Other Commitments

In the course of normal operations, Ocuphire entered into cancellable purchase commitments with its suppliers for various key research, clinical and manufacturing services.

commitments covered by these arrangements are subject to change based on Ocuphire’s research and development efforts.

The purchase commitments

covered by these arrangements are subject to change based on Ocuphire’s research and development efforts.

Critical Accounting Policies

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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.

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.

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 in Note 1 — “Company Description

and Summary of Significant Accounting Policies ” to our condensed consolidated financial statements included in “Part 1, Item 1 – Financial Statements” in this Report.

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 in Note 1 — “Company Description and Summary of

Significant Accounting Policies ” to our condensed consolidated financial statements included in “Part 1, Item 1 – Financial Statements” in this Report.

There were no additional material changes to our critical accounting policies or estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

included in our Annual Report on Form 10-K for the year ended December 31, 2020.

During the three months ended June 30, 2021, we began recognizing collaborations revenue derived from the license agreements.

As a result, we added the following critical accounting policies

Allowances for Doubtful Accounts

We record a provision for doubtful accounts, when appropriate, based on historical experience and a detailed assessment of the collectability of its accounts receivable.

In estimating the

allowance for doubtful accounts, we consider, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of each customer, and general economic conditions.

Account balances are charged off against

the allowance when we believe that it is probable that the receivable will not be recovered.

Actual write-offs may be in excess of our estimated allowance.

included in our Annual Report on Form 10-K for the year ended December 31, 2020 other than the new policies itemized below in connection with the commencement of collaborations revenue during the nine months ended September 30, 2021.

Revenue Recognition

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rights, development services, and services associated with regulatory submission and approval processes.

Significant management judgment is required to determine the level of effort required under an arrangement and the period over which we

expect to complete our performance obligations under the arrangement.

If we cannot reasonably estimate when our performance obligations are either completed or become inconsequential, then revenue recognition is deferred until we can reasonably

make such estimates.

Significant management judgment is required to determine the level of effort required under an arrangement and the period over which we expect

to complete our performance obligations under the arrangement.

If we cannot reasonably estimate when our performance obligations are either completed or become inconsequential, then revenue recognition is deferred until we can reasonably make such

Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method.

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We allocate the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation.

Ocuphire Pharma, Inc.

Licenses of intellectual property:

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We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Ocuphire Pharma, Inc.

Milestone payments:

At the inception of each arrangement that includes milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to

be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the value of the associated milestone (such as a regulatory submission) is included in the

transaction price.

At the inception of each arrangement that includes milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be

included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the value of the associated milestone (such as a regulatory submission) is included in the transaction

Milestone payments that are not within our control, such as approvals from regulators, are not considered probable of being achieved until those approvals are received.

When our assessment of probability of achievement changes

and variable consideration becomes probable, any additional estimated consideration is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance

obligation and recorded as revenue based upon when the customer obtains control of each element.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, we

recognize revenue at the later of (a) when the related sales occur, or (b) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

When our assessment of probability of achievement changes and variable

consideration becomes probable, any additional estimated consideration is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation and

recorded as revenue based upon when the customer obtains control of each element.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties

relate, we recognize revenue at the later of (a) when the related sales occur, or (b) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Short-term Investments

We determine the appropriate classification of its investments in debt and equity securities at the time of purchase and are recorded on a settlement date basis.

Our investments are comprised of

equity securities.

We classify investments available to fund current operations as current assets on our condensed consolidated balance sheets.

Realized and unrealized gains or losses stemming from these investments are recorded in other income,

net on the condensed consolidated statements of comprehensive loss.

Recent Accounting Pronouncements

Refer to Note 1- “Company Description and Summary of Significant Accounting Policies” to our condensed consolidated financial statements included in “Part 1, Item 1 – Financial Statements” in

this Report for a discussion of recently issued accounting pronouncements.

Report for a discussion of recently issued accounting pronouncements.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis