What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-03-24 compared with 2021-03-11 · 436 added, 372 removed, 138 unchanged (85% of the section changed)

6 unchanged sentences

results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Ocuphire is a clinical-stage ophthalmic biopharmaceutical company focused on developing and commercializing therapies for the treatment of several eye disorders.

Ocuphire’s pipeline 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.

Nyxol can potentially be used for the treatment of multiple indications such as dim light or night vision disturbances (“NVD”), 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 and four Phase 2 trials totaling over 230 patients and has demonstrated promising clinical data for use in multiple ophthalmic indications.

Ocuphire initiated a Phase 3 trial for the treatment of NVD in the fourth

quarter of 2020, a Phase 3 trial for reversal of pharmacologically-induced mydriasis (“RM”) in the fourth quarter of 2020, and initiated a Phase 2 trial in combination with low dose pilocarpine for presbyopia, in the first quarter of 2021.

Ocuphire expects top-line results to read out as early as the first quarter of 2021 and throughout the remainder of 2021, and, assuming successful and timely completion of further trials, anticipates submitting a new drug application (“NDA”) to

Food and Drug Administration (“FDA”) in early 2023 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 plans to initiate a Phase 2 trial for APX3330 in the first quarter of 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.

Ocuphire has also in-licensed APX2009 and APX2014, which are additional second-generation product candidates and analogs of APX3330.

As part of its strategy, Ocuphire will continue to explore opportunities to acquire additional ophthalmic assets and to seek strategic partners for late-stage development, regulatory preparation

Ocuphire is a clinical-stage ophthalmic biopharmaceutical company focused on developing and commercializing therapies for the treatment of refractive and retinal eye disorders.

pipeline currently includes two small molecule product candidates targeting several of such 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 reversal of pharmacologically-induced mydriasis (“RM”) (dilation of the pupil), presbyopia

(age-related blurry near vision) and dim light or night vision disturbances (“NVD”) (halos and glares).

Ocuphire’s management believes these multiple indications potentially represent a significant market opportunity.

Nyxol has been studied in a

total of 9 clinical trials (3 Phase 1, 5 Phase 2 and 1 Phase 3) in a total of over 560 patients (with over 330 Nyxol-treated) and has demonstrated promising clinical data for use in the multiple ophthalmic indications mentioned above.

reported positive top-line data from the first Phase 3 trial (MIRA-2) for RM, completed enrollment in a 2 nd Phase 3 RM trial (MIRA-3) in February 2022, and completed enrollment on a pediatric safety study (MIRA-4) for RM in March 2022.

Ocuphire also reported positive top-line data from a Phase 2 trial of Nyxol for treatment of presbyopia, both alone and with low-dose pilocarpine ( pilocarpine

hydrochloride 0.4% ophthalmic solution, “LDP”) as adjunctive therapy.

Ocuphire announced completion of enrollment of its NVD Phase 3 trial (LYNX-1) in January 2022.

Ocuphire expects to report top-line results from the MIRA-3 RM Phase 3

study by end of the first quarter of 2022, followed by the LYNX-1 NVD Phase 3 study and the MIRA-4 RM pediatric study in the second quarter of 2022.

Assuming successful and timely completion of the RM trials, Ocuphire anticipates submitting a new

drug application (“NDA”) to the U.S.

Food and Drug Administration (“FDA”) in late 2022 under the 505(b)(2) pathway for its drug led combination product.

Ocuphire has started pre-commercialization planning and activities in anticipation of a

successful RM approval.

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) 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 vascular damage.

Prior to Ocuphire’s in-licensing of the product candidate, APX3330 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 and oncology indications, and had demonstrated evidence of tolerability, pharmacokinetics, durability, and target engagement.

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

second-generation product candidates and analogs of APX3330.

Ocuphire initiated a Phase 2 trial 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.

In January 2022, Ocuphire reported masked safety data from the ongoing Phase 2 trial in DR/DME on 68 patients enrolled at the time.

These safety data are consistent with safety

data from the prior 11 clinical trials with total exposure experience of over 5000 subject days with 600 mg daily dose of APX3330.

Ocuphire also reported enrollment completion of 103 patients in the ZETA-1 trial in March 2022, and expects to

report top-line results from the ZETA-1 DR/DME Phase 2b study in the second half of 2022.

As part of its strategy, Ocuphire will continue to explore opportunities to acquire additional ophthalmic assets and seek strategic partners for late-stage development, regulatory preparation,

and commercialization of drugs in key global markets.

To date, Ocuphire’s primary activities have been conducting research and development activities, planning clinical trials, performing business and financial planning, recruiting personnel and

raising capital.

Ocuphire does not have any products approved for sale and has not generated any revenue.

Ocuphire does not expect to generate revenue until, and unless, the FDA or other regulatory authorities approve Nyxol or APX3330 and

Ocuphire successfully commercializes its product candidates.

Until such time, if ever, as Ocuphire can generate substantial product revenue, Ocuphire expects to finance its cash needs through a combination of equity and debt financings as well as

collaborations, strategic alliances and licensing arrangements.

Through December 31, 2020, Ocuphire has funded its operations primarily through its equity financing that totaled $21.15 million in

gross proceeds in connection with the Merger with Rexahn, net cash at Rexahn, and through the issuance of convertible notes in private placements that totaled $8.5 million in gross proceeds.

Ocuphire’s net losses were $24.6 million and $6.2

million for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, Ocuphire had an accumulated deficit of $32.7 million.

Merger with Rexahn

On November 5, 2020, Rexahn Pharmaceuticals, Inc., or Rexahn, now known as Ocuphire Pharma, Inc., completed its reverse merger or, the “Merger”, with what was then known as

“Ocuphire Pharma, Inc.,” or “Private Ocuphire”, in accordance with the terms of the Agreement and Plan of Merger and Reorganization dated as of June 17, 2020, as amended on June 29, 2020 (“Merger Agreement”).

Rexahn’s shares of common stock

listed on The Nasdaq Capital Market, previously trading through the close of business on November 5, 2020 under the ticker symbol “REXN,” commenced trading on The Nasdaq Capital Market, under the ticker symbol “OCUP,” on November 6, 2020.

Immediately following the Merger, Private Ocuphire became a wholly-owned subsidiary of Rexahn.

Upon consummation of the Merger, Rexahn adopted the business plan of Private

Although Rexahn was the legal acquirer and issued shares of its common stock to effect the Merger with Ocuphire, Ocuphire was considered the accounting acquirer.

accordance with the accounting 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 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 completion of the Merger, 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 Merger was calculated using an exchange ratio (“Exchange Ratio”) of 1.0565 shares of Common Stock for each share of Private Ocuphire common stock.

Strategic Outlook

As part of its strategy, Ocuphire will continue to explore opportunities to acquire additional ophthalmic assets and to seek strategic partners for late-stage development,

regulatory preparation and commercialization in key global markets.

To date, Ocuphire’s primary activities have been conducting research and development activities, planning clinical trials, performing business and financial planning,

recruiting personnel and raising capital.

Ocuphire does not have any products approved for sale and has not generated any significant amounts of revenue.

Ocuphire does not expect to generate significant revenues until, and unless, the FDA or

other regulatory authorities approve Nyxol or APX3330 and Ocuphire successfully commercializes its product candidates.

Until such time, if ever, as Ocuphire can generate substantial product revenue, Ocuphire expects to finance its cash needs

through a combination of equity and debt financings as well as collaborations, strategic alliances and licensing arrangements.

Through December 31, 2021, Ocuphire has funded its operations primarily through equity financings that totaled $49.6

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 $56.7 million and $24.6 million for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021,

Ocuphire had an accumulated deficit of $89.4 million.

Ocuphire anticipates that its expenses will increase substantially as it:

4 unchanged sentences

contracts to manufacture its product candidates;

establishes on its own or with partners, a sales, marketing and distribution infrastructure to commercialize any products for which Ocuphire may obtain regulatory approval;

maintains, expands and protects its intellectual property portfolio;

1 unchanged sentence

adds operational, financial and management information systems and personnel, including personnel to support its product development and potential future commercialization efforts;

operates as a public company.

Ocuphire’s net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of its preclinical studies, clinical trials and its expenditures on other

research and development activities.

continues to operate as a public company;

establishes on its own or with partners, a sales, marketing and distribution infrastructure to commercialize any products for which Ocuphire may obtain regulatory approval;

Ocuphire’s net losses may fluctuate significantly from quarter–to quarter and year–to year, depending on the

timing of its preclinical studies, clinical trials and its expenditures on other research and development activities as well as level of license fee payments received under license agreements in connection with the former Rexahn drug

Recent Developments

Merger with Rexahn

On November 5, 2020, Rexhan Pharmaceuticals, Inc., or Rexahn, now known as Ocuphire Pharma, Inc., completed its reverse merger or, the Merger, with what was then known as “Ocuphire Pharma, Inc.,”

or Private Ocuphire, in accordance with the terms of the Agreement and Plan of Merger and Reorganization dated as of June 17, 2020, as amended on June 29, 2020.

Rexahn’s shares of common stock listed on The Nasdaq Capital Market, previously

trading through the close of business on November 5, 2020 under the ticker symbol “REXN,” commenced trading on The Nasdaq Capital Market, under the ticker symbol “OCUP,” on November 6, 2020.

Immediately following the Merger, Private Ocuphire became a wholly-owned subsidiary of Rexahn.

Upon consummation of the Merger, Rexahn adopted the business plan of Private Ocuphire.

Although Rexahn was the legal acquirer and issued shares of its common stock to affect the Merger with Ocuphire, Ocuphire was considered the accounting acquirer.

In accordance with the accounting

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,

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 were based on the actual net tangible assets

of Rexahn 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.

Pre-Merger Financing

Private Ocuphire and Rexahn entered into a securities purchase agreement with the Investors in a private placement transaction for an aggregate purchase price of $21.15 million inclusive of the

commitment by five Private Ocuphire directors and one Rexahn director to purchase $300,000 (the “Pre-Merger Financing”).

The securities purchase agreement was amended and restated on June 29, 2020 (as amended and restated, the “Securities

Purchase Agreement”).

Pursuant to the Securities Purchase Agreement, among other things, Private Ocuphire agreed and issued to the Investors shares of Private Ocuphire common stock immediately prior to the merger and Rexahn agreed to issue to the

Investors warrants to purchase shares of Rexahn common stock on the earlier of (i) the tenth trading day following the consummation of the merger and (ii) the first trading day following receipt

by Rexahn of an early delivery notice from an Investor at any time beginning on the fifth trading day following the consummation of the merger.

An aggregate of 4,999,988 shares of common stock were issued in connection with the Pre-Merger

Financing as of December 31, 2020.

Ocuphire does not expect that its existing cash will be sufficient to fund its operating expenses and capital expenditure requirements for the next 12 months from the date of this Annual Report.

As such, Ocuphire will need to raise additional capital to finance its operations, which cannot be assured.

See “— Liquidity and Capital Resources .”

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread throughout the United States and around the world.

of the COVID-19 pandemic, Ocuphire has experienced a few disruptions in its manufacturing, supply chain, research and development operations, regulatory process, and financial position.

These disruptions include the acceleration of shipment of

active pharmaceutical ingredient supply from overseas, the convening of an FDA EOP2 meeting via teleconference, and difficulties in obtaining more favorable financing terms.

Clinical and CMC Milestones

In November 2021, clinical data on Nyxol and APX3330 was featured in poster sessions as presentations at the American Academy of Ophthalmology (AAO) 2021 annual meeting.

On January 5, 2022, it was announced that enrollment was complete in LYNX-1, a Phase 3 clinical trial evaluating the safety and efficacy of Nyxol eye drops for the treatment of NVD in 145 subjects.

On January 31, 2022, Ocuphire hosted a virtual investor R&D Day for the investment community.

It featured six ophthalmic Key Opinion Leaders (KOLs) from refractive surgery, optometry and retina practice areas who

shared their thoughts on three large unmet indications addressed by Ocuphire’s two late-stage clinical drug assets.

New masked safety data were presented that the Phase 2 ZETA-1 clinical trial demonstrated a favorable safety profile consistent

with prior studies for the first-in-class APX3330 oral drug with additional exposure data in diabetic patients with retinal disease.

In addition, new data from the Phase 2 VEGA-1 clinical trial were presented that show that Nyxol alone had

statistically significant improvement in efficacy and long durability compared to placebo at 12 hours post-dosing supporting future clinical development as a single daily drop.

A recording of the R&D Day is available under the News and Events

section of Ocuphire’s website.

On February 8, 2022, it was announced that enrollment was complete in MIRA-3, the second Phase 3 FDA registration trial evaluating the safety and efficacy of Nyxol eye drops to reverse

pharmacologically-induced mydriasis (RM) in 368 subjects.

On March 8, 2022, it was announced that enrollment was complete in the MIRA-4 trial evaluating the safety and efficacy of Nyxol eye drops for RM in 23 pediatric subjects.

On March 16, 2022, it was announced that enrollment was complete in the ZETA-1 trial evaluating the safety and efficacy of oral APX3330 in 103 DR/DME subjects.

Regulatory Update

On February 14, 2022, Ocuphire completed a Type-C meeting with the FDA from which it obtained guidance regarding the design of pivotal

studies for Nyxol both as a single agent and with LDP as adjunct eye drops for the treatment of presbyopia.

In addition, the FDA provided clarification of CMC and other data requirements for filing an NDA to seek approvals of Nyxol.

As a result of the COVID-19 pandemic, Ocuphire has experienced, and will likely continue to experience, delays and disruptions in

our clinical trials, as well as interruptions in our manufacturing and analytical lab operations, global supply chain and shipping, and clinical development operations.

Ocuphire’s plans for further testing or clinical trials may be further impacted by the continuing effects of COVID-19.

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

to which the COVID-19 pandemic may impact Ocuphire’s business and preclinical and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, travel

restrictions and social distancing in the U.S.

and other countries, business closures or business disruptions and the effectiveness of actions taken in the U.S.

The extent to which the COVID-19

pandemic may further impact our business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the effect of the pandemic on our suppliers and distributors and the

global supply chain, the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the U.S.

and other countries, business closures or business disruptions and the effectiveness of

actions taken in the U.S.

and other countries to contain and treat the disease.

Although Ocuphire cannot

estimate the length or gravity of the 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

The COVID-19 pandemic may also continue to impact our business as a result of employee illness, school closures, and other community response measures.

The COVID-19 pandemic may also impact our ability to secure additional financing.

Although Ocuphire cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic

continues, it may have a material adverse effect on the Company’s results of future operations, financial position, and liquidity in for fiscal year 2022 and beyond.

See “Risk Factors—Risks Related to Our Business—The COVID-19 pandemic has and could continue to adversely impact Ocuphire’s business, financial condition, cash flows, liquidity, and result in stock price

Financial Operations Overview

To date, Ocuphire has not generated any revenue.

Ocuphire does not expect to generate revenue unless or until it obtains regulatory approval of and commercializes Nyxol or APX3330.

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.

Operating Expenses

Ocuphire’s operating expenses are classified into three categories:

general and administrative, research and development and acquired in-process research and development.

General and Administrative

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.

Research and Development

To date, Ocuphire’s research and development expenses have related primarily to the clinical stage development of 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.

Research and development costs are

expensed as incurred and costs incurred by third parties are expensed as the contracted work is performed.

Ocuphire accrues for costs incurred as the services are being provided by monitoring the status of the study or project, and the invoices

received from its external service providers.

Collaborations Revenue

Collaborations revenue to date was derived from fees earned 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 may earn additional revenues stemming from additional milestone and royalty payments from this or other license agreements related to Rexahn’s legacy drug

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 significant 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 and legal settlements.

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.

Research and Development Expenses

To date, Ocuphire’s research and development expenses have related primarily to the clinical stage development of Nyxol and APX3330.

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.

Research and development costs are expensed as incurred and costs incurred by third parties are expensed as the contracted work is performed.

Ocuphire accrues for costs incurred as the services are being provided by monitoring the status of the

study or project, and the invoices received from its external service providers.

Ocuphire adjusts its accrual as actual costs become known.

Research and development activities are central to Ocuphire’s business model.

Ocuphire expects that Nyxol and APX3330 will have higher development costs during their 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.

Ocuphire expects that Nyxol and APX3330 will have higher development costs during their 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.

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:

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;

12 unchanged sentences

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”).

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

Interest Expense

Interest expense consists of interest costs related to both the issuance of the Series A Warrants (described further below) in connection with the Pre-Merger Financing and to the Ocuphire convertible notes.

Interest expense attributed to the Series A Warrants was comprised of issuance costs and day-one interest at issuance reflecting the amount by which fair value of the Series A Warrants exceeded Pre-Merger Financing proceeds.

Interest expenses

in connection with the Ocuphire convertible notes was attributed to interest on principal and to amortization of debt discount while these instruments were outstanding.

Interest expense consists of interest costs related largely to interest on principal and to amortization of debt

discount attributed to the Ocuphire convertible notes while these instruments were outstanding.

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 warrant

liabilities and premium conversion derivatives are outstanding.

This category also includes interest on principal related to a short-term loan

(related to financing an insurance policy) having an annual interest rate of 5.5%.

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.

Gain on Note Extinguishment

Gain on note extinguishment includes the gain associated with modifications made to the Ocuphire convertible notes that are accounted for as note extinguishments.

Other Income (Expense) Income

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

Other expense includes

non-operating transaction costs associated with potential asset acquisitions and can fluctuate from period to period.

Other (Expense) Income, net

Other (expense) income, net 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.

In addition, Other (expense) 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.

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.

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 December 31, 2020 and 2019.

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.

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 December 31, 2021 and 2020.

Results of Operations

1 unchanged sentence

For the Year Ended

Collaborations revenue

Operating expenses:

7 unchanged sentences

Gain on note extinguishment

Other income (expense), net

Other (expense) income, net

Loss before income taxes

1 unchanged sentence

Comparison of Years Ended December 31, 2021 and 2020

Collaborations Revenue

Collaborations revenue was $0.6 million for the year ended December 31, 2021.

Revenue during 2021 was derived

from the collaboration and license agreements with Processa and BioSense related to certain technology transfers in connection with the Rexahn RX-3117 drug compound, a legacy asset not under development by Ocuphire.

collaborations revenue recognized during the prior year period.

General and Administrative

General and administrative expenses for the year ended December 31, 2021 were $8.1 million compared to $2.8 million for the year ended December 31, 2020.

The $1.0 increase was primarily

attributable to an increase in stock-based compensation, professional services, insurance and legal costs associated with the reverse merger in the current period.

General and administrative expenses included $0.7 million and $0.2 million in

stock-based compensation expense during the years ended December 31, 2020 and 2019, respectively.

The $5.3 million

increase was primarily attributable to administrative employee headcount in the amount of $0.8 million, stock-based compensation of $0.4 million, insurance of $0.9 million, legal costs of $0.5 million, non-cash settlement costs of $1.6 million

with certain investors, costs associated with operating as a public company subsequent to the reverse merger of $0.8 million, and professional services and other operating costs of $0.3 million on a net basis.

General and administrative expenses

included $1.1 million and $0.7 million in stock-based compensation expense during the years ended December 31, 2021, and 2020, respectively.

Research and Development

Research and development expenses for the year ended December 31, 2021 were $15.2 million compared to $6.6 million for the year ended December 31, 2020.

The $4.3 million increase was primarily attributable to

clinical trials and manufacturing activities to support clinical advancement of Nyxol as well as regulatory and business development efforts.

Research and development expenses also included $0.8 million and $0.1 million in stock-based

compensation expense during the years ended December 31, 2020 and 2019, respectively.

The $8.5 million

increase was primarily attributable to clinical trials of $4.6 million, manufacturing activities to support clinical advancement of Nyxol and APX3330 of $1.9 million, consulting services of $1.1 million as well as regulatory and other research

and development efforts of $0.9 million on a net basis.

Research and development expenses also included $0.8 million in stock-based compensation expense during each of the years ended December 31, 2021 and 2020.

Acquired In-Process Research and Development Expenses

On January 21, 2020, Ocuphire entered into a sublicense agreement with Apexian for continued research and development and potential commercialization of its lead product, APX3330.

Ocuphire issued

843,751 shares of its common stock to Apexian related to the Apexian Sublicense Agreement.

The fair value of the common stock issued to Apexian was $2.1 million and was recorded as IPR&D expense during the year ended December 31, 2020.

addition, research and development projects of Rexahn which were in-process at the Merger date were expensed as IPR&D and amounted to $8.4 million.

Current 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 comparable prior year period.

On January 21, 2020, Ocuphire entered into a sublicense agreement with Apexian for continued research and development and potential commercialization of its lead product,

Ocuphire issued 843,751 shares of its common stock to Apexian related to the Apexian Sublicense Agreement.

The fair value of the common stock issued to Apexian was $2.1 million and was recorded as IPR&D expense during the year ended

December 31, 2022.

In addition, research and development projects of Rexahn which were in-process at the Merger date were expensed as IPR&D and amounted to $8.4 million.

Current 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 during the comparable current year period.

Interest Expense

Interest expense for the year ended December 31, 2020 was $6.8 million (of which $6.1 million was non-cash) compared to $1.4 million for the year ended December 31, 2019 which was all non-cash.

The $5.4 million increase was primarily due to the amount by which the fair value of the Series A Warrants issued in connection with the Pre-Merger Financing exceeded proceeds, or $4.7 million, given the Series A Warrants are classified as

warrant liabilities.

Cash financing costs attributed to the Series A warrants in the amount of approximately $0.7 million also increased interest cost year-over-year.

Lastly, interest costs during 2020 and 2019 included interest on principal and

amortization of debt discounts related to the Ocuphire convertible notes which amounted to $1.5 million and $1.4 million, respectively.

Interest expense for the year ended December 31, 2021 of $2,000 was attributable to a short-term loan (related to

financing an insurance policy).

Interest expense for the year ended December 31, 2020 was $6.8 million (of which $6.1 million was non-cash) and was primarily

attributable to the amount by which the fair value of the Series A Warrants issued in connection with the Pre-Merger Financing exceeded proceeds, or $4.7 million, as the Series A Warrants are classified as warrant liabilities.

cash financing costs attributed to the Series A warrants in the amount of $0.7 million also increased interest cost year-over-year.

Lastly, interest on principal and amortization of debt discounts, in the aggregate of $1.5 million, in

connection with the Ocuphire convertible notes compromised the balance of interest expense during the year ended December 31, 2020.

Fair Value Change in Derivative and Warrant Liabilities

The fair value change in derivative and warrant liabilities was an expense of $1.5 million for the year ended December 31, 2020 compared to $0.5 million for the year ended December 31, 2019.

$1.0 million change was due primarily to the issuance of the Series A warrants in connection with the Pre-Merger Financing 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.

The fair value change in derivative and warrant liabilities was an expense of $33.8 million for the year ended December 31, 2021 compared to an expense of $1.5 million for

the year ended December 31, 2020.

The $32.3 million change was due primarily to the issuance of the Series A warrants in connection with the Pre-Merger Financing 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.

Gain on Note Extinguishment

Non-cash gain on note extinguishment for the year ended December 31, 2020 was $3.7 million as a result of both the Note Conversion Agreement (as defined and further described below) of $1.3

million and the conversion of the Ocuphire convertible notes in connection with the Merger.

The Note Conversion Agreement was deemed to be a substantial modification to the Ocuphire convertible notes (as defined below), and as such, we recorded

the modification as a note extinguishment.

In addition, given that the Ocuphire convertible notes contained embedded derivatives, the conversion of the Ocuphire convertible notes into equity upon close of the Merger was also treated as a note

extinguishment of $2.4 million.

There were no modifications to the Ocuphire convertible notes in the comparable prior year that were accounted for as a note extinguishment.

Other Income (Expense), net

During the year ended December 31, 2020, Ocuphire had interest income related to cash deposits on hand received from its debt financings.

In addition, Ocuphire received a grant from the U.S.

Small Business Administration for economic relief stemming from the COVID-19 pandemic in the amount of $4,000 that was recorded as other income.

During the year ended December 31, 2019, Ocuphire incurred $0.1 million in fees and expenses related to potential acquisition transactions, including legal and advisory fees, that were deemed to

be non-operating in nature.

No income was recorded during 2019.

Non-cash gain on note extinguishment for the year ended December 31, 2020 was $3.7 million as a result of both the Note Conversion Agreement (as defined and further described

below) of $1.3 million and the conversion of the Ocuphire convertible notes in connection with the Merger.

The Note Conversion Agreement was deemed to be a substantial modification to the Ocuphire convertible notes (as defined below), and as

such, we recorded the modification as a note extinguishment.

In addition, given that the Ocuphire convertible notes contained embedded derivatives, the conversion of the Ocuphire convertible notes into equity upon close of the Merger was also

treated as a note extinguishment of $2.4 million.

There were no Ocuphire convertible notes outstanding during the current year period.

Other (Expense) Income, net

During the year ended December 31, 2021, Ocuphire had other expense of $91,000 stemming from payments due in connection with the CVR Agreement and $70,000 stemming

principally from net unrealized losses from our short-term investments.

Other expense during the year ended December 31, 2020 was negligible.

Other income during the year ended December 31, 2021 and 2020 was $4,000 and $9,000, respectively.

Other income consisted primarily of interest earnings on our cash and

cash equivalent investments during the year ended December 31, 2021.

During the year ended December 31, 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.

Liquidity and Capital Resources

1 unchanged sentence

As of December 31, 2021, Ocuphire’s principal sources of liquidity consisted of cash and cash equivalents of $24.5 million.

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

deposits at a large, long-standing financial institution.

Ocuphire believes that its cash on hand at the end

of 2021 will be sufficient to fund its operations into the second quarter of 2023.

The Company’s cash and cash equivalents are invested primarily in cash deposits at a large, long-standing financial institution.

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

Future capital requirements depend on many factors, including:

continues clinical trials and preclinical studies for Nyxol, APX 3330 and for any other product candidate in its future pipeline;

develops additional product candidates that it identifies, in-licenses or acquires;

seeks regulatory approvals for any product candidates that successfully complete clinical trials;

Future capital requirements depend on many factors,

including the need for the following:

continued clinical trials and preclinical studies for Nyxol, APX 3330 and for any other product candidate in its future pipeline;

developing additional product candidates that it identifies, in-licenses or acquires;

seeking regulatory approvals for any product candidates that successfully complete clinical trials;

contracts to manufacture its product candidates;

establishes on its own or with partners, a sales, marketing and distribution infrastructure to commercialize any products for which it may obtain regulatory approval;

maintains, expands and protects its intellectual property portfolio;

hires additional staff, including clinical, scientific, operational and financial personnel, to execute its business plan;

adds operational, financial and management information systems and personnel, including personnel to support its product development and potential future commercialization efforts;

operates as a public company.

establishing on its own or with partners, a sales, marketing and distribution infrastructure to commercialize any products for which it may obtain regulatory approval;

maintaining, expanding and protecting its intellectual property portfolio;

hiring additional staff, including clinical, scientific, operational and financial personnel, to execute its business plan;

adding operational, financial and management information systems and personnel, including personnel to support its product development and potential future commercialization efforts;

operating as a public company.

Historical Capital Resources

Ocuphire’s primary source of cash to fund Ocuphire’s operations has been net proceeds from the Pre-Merger Financing in the amount of $19.4 million and the issuance of convertible notes subsequent

to the Ocuphire’s incorporation in April 2018 in the amount of $8.5 million, inclusive of the promissory notes exchanged for Ocuphire convertible notes.

Ocuphire’s primary source of cash to fund its operations has been various equity offerings in the amount of $50.0 million and the issuance of convertible notes in the amount of $8.5 million,

inclusive of the promissory notes exchanged for Ocuphire convertible notes.

Registered Direct Offering

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 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 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 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, 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 December 31, 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 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”).

year ended December 31, 2021, 2,778,890 shares of common stock were sold under the 2021 ATM for gross proceeds in the amount of $13.5 million before deducting issuance expenses in the amount of $0.4 million.

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”).

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 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 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

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 the Company 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 1,708,334 in the aggregate with respect to all Holders.

Series A Warrants

1 unchanged sentence

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).

The Series A Warrants provide that, until the second anniversary of the date on which all shares of common stock issued and issuable to the investors may be sold without restriction or

limitation pursuant to Rule 144, if Ocuphire publicly announces, issues or sells, enters into a definitive, binding agreement pursuant to which Ocuphire is required to issue or sell or is deemed, pursuant to the provisions of the Series A

Warrants, to have issued or sold, any shares of common stock for a price per share lower than the exercise price then in effect, subject to certain limited exceptions, then the exercise price of the Series A Warrants will be reduced to such lower

price per share.

Further, on each Reset Date (as defined below under Series B Warrants ) the Series A Warrants will be adjusted downward (but not increased) such that the exercise price thereof becomes 120% of the Reset Price (as defined below),

and the number of shares underlying the Series A Warrants will be increased (but not decreased) to the quotient of (a) (i) the exercise price in effect prior to such Reset (as defined below under Series B Warrants) multiplied by (ii) the number

of shares underlying the Series A Warrants prior to the Reset divided by (b) the resulting exercise price.

In addition, the exercise price and the number of shares of Common Stock issuable upon exercise of the Series A Warrants will also be

subject to adjustment in the event of any stock splits, dividends or distributions or other similar transactions.

As of December 31, 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

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

1 unchanged sentence

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 are initially

exercisable for 665,836 shares of Common Stock in the aggregate (without giving effect to any limitation on exercise contained therein).

Additionally, every ninth trading day up to and including the 45th trading day (each, a “Reset Date”) following (i) six months following the issuance date (the “Six Month Reset Date”) and (ii) if

a Public Information Failure has occurred at any time following the Six Month Reset Date, the earlier to occur of (x) the date that such Public Information Failure is cured and no longer prevents the holder from selling all underlying securities

pursuant to Rule 144 without restriction or limitation and (y) the earlier to occur of (I) the date all of the underlying securities may be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in

compliance with Rule 144(c)(1) and (II) one year after the issuance date (each such date provided in the foregoing clauses (i), (ii) and (iii), an “End Reset Measuring Date”) (such 45 trading day period, the Reset Period and each such 45th

trading day after an End Reset Measuring Date, an “End Reset Date”), the number of shares issuable upon exercise of each Investor’s Series B Warrants shall be increased (a “Reset”) to the number (if positive) obtained by subtracting (i) the sum

of (a) the number of Converted Initial Shares issued to the investor and (b) the number of Converted Additional Shares delivered or deliverable to the investor as of the Warrant Closing Date, from (ii) the quotient determined by dividing (a) the

pro rata portion of the Purchase Price paid by the Investor, by (b) the greater of (x) the arithmetic average of the five lowest dollar volume-weighted average prices of a share of Common Stock on Nasdaq during the applicable Reset Period

immediately preceding the applicable Reset Date to date and (y) a floor price per share calculated based on a pre-money valuation (of the Combined Company, assuming for this purpose the pre-money issuance of the Converted Initial Shares and

Converted Additional Shares) of $10 million.

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 December 31, 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

2 unchanged sentences

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.

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 Ocuphire convertible notes 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.

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

5 unchanged sentences

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

valuation of such CIC.

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 valuation of such CIC.

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”).

3 unchanged sentences

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

(i) 150% of the Note Value divided by the per share price of Ocuphire common

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

(i) 150% of the Note Value divided by the per share price of Ocuphire common stock issued to purchasers in the IPO, and (ii) 100% of the Note Value divided by the per share price of

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

(i) 200% of the Note Value divided by the per share price of Ocuphire common

stock based on the valuation of such CIC, and (ii) 100% of the Note Value divided by the per share price of $10.37.

(i) 200% of the Note Value divided by the per share price of Ocuphire common stock based on the valuation of such CIC, and (ii) 100% of the Note Value divided by the per share price of

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 :

Either shares of Ocuphire common stock issued in the Reverse Merger or equity securities of the Reverse Merger counterparty, in an amount equal to the greater of:

(i) 150% 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, and (ii) 100% Note Value divided by the per share price of $10.37.

Either shares of Ocuphire common stock issued in the Reverse Merger or equity securities of the Reverse

Merger counterparty, in an amount equal to the greater of:

(i) 150% 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, and (ii) 100% Note Value divided by the per share price of $10.37.

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

The terms under the First Amendment reflect the current terms in effect for

the Ocuphire convertible notes as of the date of this proxy statement/prospectus/information statement, except as further amended by the Note Conversion Agreement (defined below).

The First Amendment extended the demand date of the Ocuphire

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.

the Ocuphire convertible notes as of the date of this Annual Report, except as further amended by the Note Conversion Agreement (defined below).

The First Amendment extended the demand date of the Ocuphire 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.

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.

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.

“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;

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

3 unchanged sentences

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Net cash provided by financing activities

1 unchanged sentence

Cash Flow from Operating Activities

For the year ended December 31, 2020, cash used in operating activities of $6.8 million was attributable to a net loss of $24.6 million, partially offset by $16.7 million in non-cash operating

expenses and a net change of $1.1 million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted of IPR&D in the amount $10.5 million, day-one interest attributed to the issuance of Series A Warrants in the amount

of $4.7 million, stock-based compensation of $1.5 million, non-cash interest and discount amortization related to the Ocuphire convertible notes of $1.5 million, a fair value change in derivative and warrant liabilities in the amount of $1.5

million, a reclassification of issuance costs to financing activities in the amount of $0.7 million and depreciation expense of $8,000, offset by a non-cash gain on note extinguishment of $3.7 million.

The change in operating assets and

liabilities was primarily attributable to an overall net increase in Ocuphire’s accrued liabilities and accounts payable offset in part by an increase in prepaid expenses associated with the fluctuations of Ocuphire’s operating expenses and in

connection with transaction costs attributed to the Merger.

For the year ended December 31, 2019, cash used in operating activities of $3.6 million was attributable to a net loss of $6.2 million, partially offset by $2.2 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 stock-based compensation of $0.3 million, non-cash interest and discount amortization related to the Ocuphire convertible notes of

$1.4 million, the fair value change in the premium conversion derivatives of $0.5 million and depreciation expense of $3,000.

For the year ended December 31, 2021, cash used in operating activities of $19.4 million was attributable to a net

loss of $56.7 million, partially offset by $37.1 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 largely of stock-based compensation of

$1.9 million, fair value change in warrant liabilities in the amount of $33.8 million, a share settlement with certain investors in the amount of $1.6 million and

non-cash impact from the receipt of common stock stemming from the fulfillment of revenue milestones ($0.2) million.

The change in operating assets and liabilities was primarily attributable to an overall net increase in Ocuphire’s

accrued liabilities and by a decrease in prepaid expenses associated with the fluctuations of Ocuphire’s operating expenses.

accounts payable offset in part by both an increase in prepaid expenses and a decrease in accrued expenses associated with the fluctuations of Ocuphire’s operating expenses.

For the year ended December 31, 2020, cash used in operating activities of $6.8 million was attributable to a net loss of $24.6 million, partially offset by $16.7 million in

non-cash operating expenses and a net change of $1.1 million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted of IPR&D in the amount $10.5 million, day-one interest attributed to the issuance of Series A

Warrants in the amount of $4.7 million, stock-based compensation of $1.5 million, non-cash interest and discount amortization related to the Ocuphire convertible notes of $1.5 million, a fair value change in derivative and warrant liabilities in

the amount of $1.5 million, a reclassification of issuance costs to financing activities in the amount of $0.7 million and depreciation expense of $8,000, offset by a non-cash gain on note extinguishment of $3.7 million.

The change in operating

assets and liabilities was primarily attributable to an overall net increase in Ocuphire’s accrued liabilities and accounts payable offset in part by an increase in prepaid expenses associated with the fluctuations of Ocuphire’s operating

expenses and in connection with transaction costs attributed to the Merger.

Cash Flow from Investing Activities

During the year ended December 31, 2020, net cash provided by investing activities was $0.5 million.

Investing activities during the period consisted of cash acquired, net of transaction costs

During the years ended December 31, 2021 and 2020, net cash (used in) provided by investing activities was $(0.1) million and $0.5 million, respectively.

Investing activities

during the current year period related to the payment of the remaining transaction costs associated with the Merger.

During the prior year period ended December 31, 2020, investing activities consisted of cash acquired, net of transaction costs

paid, in connection with the Merger.

Net cash used during the year ended December 31, 2019 of $25,000 was related to the purchase of property and equipment.

Cash Flow from Financing Activities

Net cash provided by financing activities during the year ended December 31, 2020 was $21.1 million, consisting primarily of net proceeds as a result of the Pre-Merger Financing in the amount of

approximately $19.4 million and from the issuance of the Ocuphire convertible notes in the amount of $2.2 million, offset in part by the cash settlement of Rexahn warrants post-Merger in the amount of $0.5 million.

Net cash provided by financing activities during the year ended December 31, 2019 was $4.7 million, consisting of net proceeds from the issuance of the Ocuphire convertible notes.

Net cash provided by financing activities during the year ended December 31, 2021 was $27.6 million relating principally to proceeds received in

connection with both the Registered Direct Offering and 2021 ATM, net of issuance costs, in the amount of $27.0 million.

Proceeds, net of payments, received in connection with a short-term loan in the amount of $0.5 million and the exercise of

stock options in the amount of $0.1 million comprised the balance of financing activities during the period.

Net cash provided by financing activities during the year ended December 31, 2020 was $21.1 million, consisting

primarily of net proceeds as a result of the Pre-Merger Financing in the amount of $19.4 million and from the issuance of the Ocuphire convertible notes in the amount of $2.2 million, offset in part by the cash settlement of Rexahn warrants

post-Merger in the amount of $0.5 million.

Liquidity and Capital Resource Requirements

Ocuphire has no current source of revenue to sustain its present activities, and Ocuphire does not expect to generate revenue until, and unless, the FDA or other regulatory authorities approve

Nyxol or APX3330 and it successfully commercializes its product candidates.

Until such time, if ever, as Ocuphire can generate substantial product revenue, it expects to finance its cash needs through a combination of equity and debt financings

as well as collaborations, strategic alliances and licensing arrangements.

Ocuphire has no current source of revenue to sustain its present activities, and Ocuphire does not expect to generate revenue until, and unless, the FDA or other regulatory

authorities approve Nyxol or APX3330 and it successfully commercializes its product candidates.

Until such time, if ever, as Ocuphire can generate substantial product revenue, it expects to finance its cash needs through a combination of equity

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

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 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.

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.

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.

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 its 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.

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, 2021 and 2020, noting the existence of substantial doubt about its 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 substantially beyond twelve months following the date of

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 these estimates on assumptions that may prove to be substantially different than what Ocuphire

currently anticipates and could result in cash resources being used sooner than what 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 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

The development of Nyxol and APX3330 is subject to numerous uncertainties, and Ocuphire has based these estimates on assumptions that may prove to be substantially different

than what Ocuphire currently anticipates and could result in cash resources being used sooner than what 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.

Ocuphire cannot

assure you that it will ever be profitable or generate positive cash flow from operating activities.

Ocuphire cannot give any assurance that it will ever be profitable or generate positive cash flow from operating activities.

Contractual Obligations and Commitments

Facility Lease

Ocuphire leases a facility under a non-cancellable operating lease that commenced on June 8, 2019 and expires on December 31, 2021, as amended, for a base rent in the amount of $3,000 per month.

Additionally,

Ocuphire is leasing 5,466 square feet of office space in Rockville, Maryland previously occupied by Rexahn for a base rent of approximately $13,000 per month.

The Rockville, Maryland lease expires in June 2021.

Ocuphire leases a facility under a non-cancellable operating lease that commenced on June 8, 2019 and expires on December 31, 2022, as amended, for a base rent in the amount

of $3,000 per month.

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 wAMD.

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 wAMD.

In connection with the Apexian Sublicense Agreement, Ocuphire issued 843,751 shares of Private Ocuphire common stock to Apexian and certain of Apexian’s affiliates.

The share issuance transaction

was recorded in the amount of $2.1 million as IPR&D expense for the year ended December 31, 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.

issuance transaction was recorded in the amount of $2.1 million as IPR&D expense for the year ended December 31, 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 reimbursed Apexian $0.4 million of Ref-1 Inhibitor program costs during

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.

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 agreed to make one-time milestone payments under the Apexian Sublicense Agreement for each of the first ophthalmic indication and the first diabetes mellitus

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, each of which net sales

milestone payments is 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

None of the milestone or royalty payments were triggered as of the date of this Annual Report.

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.

Other Funding Requirements

As noted above,

certain of our cash requirements relate to the funding of our ongoing research and development of Nyxol and APX3330, inclusive of any potential milestone and royalty obligations under our intellectual property licenses.

See “Part I, Item 1—

Business—Nyxol and APX3330 Clinical Experience Summaries —Ocuphire Clinical Development Plan —Future Planned Nyxol Trials—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 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, supplies, payroll, equipment maintenance, and audits for periods into calendar year 2023.

Refer to Note 3 – Commitments and Contingencies included in “Part II, Item 8 – Financial Statements

and Supplementary Data” in this Annual 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 and from future equity and debt

financings until we generate an adequate level of revenue from commercial sales to cover expenses, if ever.

Critical Accounting Policies and Estimates

Ocuphire’s financial statements are prepared in accordance with U.S.

These accounting principles require Ocuphire 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.

Ocuphire believes that the estimates and judgments upon which it relies are reasonably based

upon information available to Ocuphire at the time that it makes these estimates and judgments.

To the extent that there are material differences between these estimates and actual results, Ocuphire’s financial results will be affected.

accounting policies that reflect Ocuphire’s more significant estimates and judgments and which it believes are the most critical to aid in fully understanding and evaluating its reported financial results are described below.

The following is not intended to be a comprehensive list of all of Ocuphire’s accounting policies or estimates.

Ocuphire’s accounting policies are more fully described in Note 1 — Company

Description and Summary of Significant Accounting Policies, in its financial statements included elsewhere in this annual report.

Acquired In-Process Research and Development Expenses

Ocuphire includes costs to acquire or in-license product candidates in 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 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.

These accounting principles require Ocuphire 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.

Ocuphire believes that the estimates and judgments upon which it relies are

reasonably based upon information available to Ocuphire at the time that it makes these estimates and judgments.

To the extent that there are material differences between these estimates and actual results, Ocuphire’s financial results will be

The accounting policies that reflect Ocuphire’s more significant estimates and judgments and which it believes are the most critical to aid in fully understanding and evaluating its 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 II, Item 8

– Financial Statements and Supplementary Data” of this Annual 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.

Collaborations Revenue

We account for 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.

entered into license agreements which have revenue recognition implications.

For discussion about the determination of collaborations revenue, see Note 10 — Collaboration and License Agreements included in “Part II, Item 8 – Financial

Statements and Supplementary Data” of this Annual Report.

To date, we have not had, nor do we expect to have in the future, significant variable consideration adjustments related to our collaborations

Warrant Liabilities

Following the Merger, Ocuphire issued the Series A Warrants in connection with the Pre-Merger Financing, and assumed Rexahn warrants issued prior to the Merger.

Ocuphire accounts for these

warrants as a liability at fair value as certain provisions precluded equity accounting treatment for these instruments.

Additionally, issuance costs associated with the warrants classified as liabilities are expensed as incurred and reflected as

interest expense in the accompanying consolidated statements of comprehensive loss.

Ocuphire will continue to adjust the liabilities for changes in fair value until the earlier of the exercise, expiration, or until such time that cash settlement

or indexation provisions are no longer in effect for the warrants.

The change in fair value of the warrant liabilities will be recognized as a component of the fair value change in derivative and warrant liabilities

line item in the consolidated statements of comprehensive loss.

Common Stock Valuation

Prior to the close of the Merger, due to the absence of an active market for Private Ocuphire’s common stock, Ocuphire utilized methodologies in accordance with the framework of the American

Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair value of its common stock.

valuation methodology included estimates and assumptions that required the Company’s judgment.

These estimates and assumptions included a number of objective and subjective factors, including external market conditions affecting the biotechnology

industry sector, and the likelihood of achieving a liquidity event, such as an initial public offering (IPO), reverse merger or sale.

Significant changes to the key assumptions used in the valuations resulted in different fair values of common

stock at each valuation date.

For the valuation of equity awards granted in October 2020 and September 2020, Ocuphire used a contemporaneous third-party valuation of $8.76 and $7.89 per share, respectively.

For the valuation

of equity awards granted in April 2020 and June 2020, Ocuphire applied a straight-line calculation using the contemporaneous third-party valuations of $1.74 per share as of March 31, 2020 and $9.54 per share as of June 18, 2020 to determine the

fair value of Private Ocuphire’s common stock.

Using the benefit of hindsight, Ocuphire determined that the straight-line calculation would provide the most reasonable conclusion for the valuation of its common stock on these interim dates

between valuations because Ocuphire did not identify any single event or series of events that occurred during this interim period that would have caused a material change in fair value.

Based on this calculation, Ocuphire assessed the fair value

of its common stock for awards granted in April 2020 and June 2020 at $2.33 and $8.65 per share, respectively.

Premium Conversion Derivatives

Ocuphire evaluates all conversion and redemption features contained in a debt instrument to determine if there are any embedded derivatives that require separation from the host debt instrument.

An embedded derivative that requires separation is bifurcated from its host debt instrument and a corresponding discount to the host debt instrument is recorded.

The discount is amortized and recorded to interest expense over the term of the host

debt instrument using the straight-line method which approximates the effective interest method.

The separated embedded derivative is accounted for separately on a fair market value basis.

Ocuphire records the fair value changes of a separated

embedded derivative at each reporting period in the consolidated statements of comprehensive loss as a fair value change in derivative and warrant liabilities.

Ocuphire determined that the redemption features under the Ocuphire convertible notes

qualified as embedded derivatives and were separated from the debt host with regard to the Ocuphire convertible notes issued in May 2018 through March 2020.

Stock-Based Compensation

Ocuphire accounts for share‑based compensation in accordance with the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC 718), Compensation — Stock Compensation .

Accordingly, compensation costs related to equity instruments granted are recognized at the grant‑date fair value.

The Company records forfeitures when they occur.

Share‑based compensation arrangements to non‑employees are accounted for in accordance with the applicable provisions of ASC 718.

Off-Balance Sheet Arrangements

Ocuphire did not have during the periods presented, and does not currently have, any off-balance sheet financing arrangements.

In addition, Ocuphire did not have during the periods presented, and

does not currently have any interest in entities referred to as variable interest entities, which include special purpose entities and other structured finance entities.

Following the Merger, Ocuphire issued the Series A Warrants in connection with the Pre-Merger Financing, and assumed Rexahn warrants issued prior to the

Ocuphire accounts for these warrants as a liability at fair value as long as certain provisions precluding equity accounting treatment are present.

Upon the execution of the Waiver Agreements described in Note 9 — Stockholders’

Equity (Deficit) included in “Part II, Item 8 – Financial Statements and Supplementary Data” of this Annual Report, the Series A Warrants were no longer subject to cash settlement or indexation

provisions precluding equity classification, and as a result, not subject to fair value remeasurement.

Ocuphire will continue to adjust the Rexahn warrant liability for changes in fair value until the earlier of the exercise, expiration, or

until such time that cash settlement or indexation provisions are no longer in effect for the Rexahn warrants.

We do not expect that the fluctuations in fair value attributed to the Rexahn warrant liability will be significant.

Share-based Compensation

Ocuphire accounts for share-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 share-based compensation, see Note 9 — Share-based Compensation included in “Part II, Item 8 – Financial Statements and Supplementary Data” of this Annual Report.

Income Tax Assets and Liabilities

Currently, there is no provision for income taxes, as we have incurred operating losses to date, and a full valuation allowance has been provided on our net deferred tax

For additional information, see Note 12 — Income Taxes included in “Part II, Item 8 – Financial Statements and Supplementary Data” of this Annual Report.

Contingencies

We are subject to numerous contingencies arising in the ordinary course of business, including obligations related to certain license agreements.

additional information, see Note 3 — Commitments and Contingencies included in “Part II, Item 8 – Financial Statements and Supplementary Data” of this Annual Report.

Recent Accounting Pronouncements

From time to time the FASB, or other standard-setting bodies, issue new accounting pronouncements.

Where applicable, Ocuphire adopts these new standards according to the specified effective

Unless otherwise disclosed in the notes to the financial statements appearing in this annual report , Ocuphire believes that the impact of any recently issued standard(s) that are not yet

effective will not have a material impact on its financial position or results of operations upon adoption.

See Note 1, “Company Description and Summary of Significant Accounting Policies,” in the notes to Ocuphire’s financial statements for a

more in-depth discussion of recently issued accounting standard(s).

QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

Where applicable, Ocuphire adopts these new standards according to the

specified effective dates.

Unless otherwise disclosed in the notes to the financial statements appearing in this annual report, Ocuphire believes that the impact of any recently issued standard(s) that are not yet effective will not have a

material impact on its financial position or results of operations upon adoption.

See Note 1, “Company Description and Summary of Significant Accounting Policies,” in the notes to Ocuphire’s financial statements for a more in-depth discussion of

recently issued accounting standard(s).

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is included in this Annual Report beginning on page F-1 and is incorporated herein by reference.

CHANGES IN AND DISAGREEMENTS WITH ACCOU NTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 7. Management’s Discussion and Analysis