What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-13 · 246 added, 208 removed, 406 unchanged (53% of the section changed)

20 unchanged sentences

Preferred stock, par value $ 0.0001 ;

10,000,000 shares authorized as of March 31, 2022 and December 31, 2021 ;

no shares issued and outstanding at March 31, 2022 and

10,000,000 shares authorized as of June 30, 2022 and December 31, 2021 ;

no shares issued and outstanding at June 30, 2022 and

December 31, 2021 .

Common stock, par value $ 0.0001 ;

75,000,000 shares authorized as of March 31, 2022 and December 31, 2021 ;

75,000,000 shares authorized as of June 30, 2022 and December 31, 2021 ;

20,099,602 and 18,845,828 shares issued and outstanding at

March 31, 2022 and December 31, 2021 , respectively.

June 30, 2022 and December 31, 2021 , respectively.

Additional paid-in-capital

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Ocuphire Pharma, Inc.

Condensed Consolidated Statements of

Comprehensive Loss

Condensed Consolidated

Statements of Comprehensive Loss

(in thousands, except share and per share amounts)

Three Months Ended

For the Three Months Ended

For the Six Months Ended

Collaborations revenue

Operating expenses:

4 unchanged sentences

Interest expense

Fair value change in warrant liabilities

Other (expense) income, net

Fair value change of warrant liabilities

Other income (expense), net

Loss before income taxes

8 unchanged sentences

Ocuphire Pharma, Inc.

Condensed Consolidated Statements of Changes in

Stockholders’ Equity (Deficit)

Condensed Consolidated Statements of

Changes in Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

6 unchanged sentences

Balance at March 31, 2021

Issuance of common stock and warrants in connection with registered direct

Issuance of common stock in connection with the at-the-market program

Issuance of common stock in connection with settlement with investors

Issuance costs

Stock–based compensation

Exercise of Series B warrants

Net and comprehensive loss

Balance at June 30, 2021

Balance at December 31, 2021

5 unchanged sentences

Balance at March 31, 2022

Issuance of common stock in connection with the at-the-market program

Issuance costs

Stock–based compensation

Net and comprehensive loss

Balance at June 30, 2022

See accompanying notes.

3 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Operating activities

2 unchanged sentences

Fair value change in warrant liabilities

Non-cash share settlement with investors

Unrealized loss from short-term investments

Change in assets and liabilities:

Collaborations receivable

Prepaid expenses and other assets

5 unchanged sentences

Financing activities

Proceeds from issuance of common stock in connection with the at-the-market program

Proceeds from issuance of common stock – registered direct offering

Proceeds from issuance of common stock – at-the-market program

Issuance costs

Payments made in connection with short-term loan

Payments in connection with short-term loan

Exercise of stock options

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

22 unchanged sentences

such losses to continue indefinitely until a sustained revenue source is realized.

Management plans to continue financing the Company’s operations primarily through additional issuances of the Company’s equity and debt securities.

adequate funds are not available, the Company may be required to delay, reduce the scope of, or eliminate part or all of its research and development programs.

Management plans to continue financing the Company’s operations primarily through additional issuances of the Company’s equity and debt securities or through collaborations or partnerships with other companies .

If adequate funds are not

available, the Company may be required to delay, reduce the scope of, or eliminate part or all of its research and development programs.

The Company’s headquarters is located in Farmington Hills, Michigan.

As a result of the COVID-19 pandemic, the Company has experienced, and may continue to experience, delays and disruptions in our

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

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

outbreak of COVID-19 continues to evolve.

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 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.

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 the Company’s ability to secure additional financing.

Although the Company 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 fiscal year 2022 and

Global Economic Conditions

The COVID-19 pandemic that began around December 2019 introduced significant volatility to the global economy,

disrupted supply chains and had a widespread adverse effect on the financial markets.

As a result of the COVID-19 pandemic, the Company has experienced, and may continue to experience, delays and disruptions in our clinical trials, as

well as interruptions in our manufacturing, supply chain, shipping and research and development operations.

Testing and clinical trials, manufacturing, component supply, shipping and research and development operations may be further

impacted by the continuing effects of COVID-19.

The lingering impacts of COVID-19 throughout 2021 and into 2022 have impeded global supply chains and resulted in

inflationary cost increases.

These broad-based inflationary impacts may increase future manufacturing costs of our products and product candidates.

We expect these inflationary impacts to continue for the foreseeable future.

In addition to the direct and indirect impacts of COVID-19, the United States and global markets are experiencing

volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.

In February 2022, Russia launched a full-scale military invasion of Ukraine.

As a result of the

conflict, the United States, United Kingdom, European Union and other countries have levied economic sanctions and bans on Russia and Russia has responded with its own retaliatory measures.

These measures have contributed to significant

volatility and negative pressure in financial markets.

Securities of microcap and small-cap companies, including biotechnology companies in particular, have experienced substantial volatility in the recent past, often based on factors

unrelated to the companies’ financial performance or prospects.

Further decline in global economic conditions could have a lasting impact on regional and global economies, and may have a material adverse effect on the Company’s results of

future operations, financial position, and liquidity for the duration of fiscal year 2022 and beyond .

Basis of Presentation

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Going Concern

The Company’s ability to continue operating as a going concern is contingent upon, among other things, its ability to secure additional financing

and to achieve and maintain profitable operations.

The Company plans to issue additional equity and debt instruments to finance operating and working capital requirements, including additional issuances under the 2021 at-the-market

program discussed further below.

The Company’s ability to continue operating as a going concern is contingent upon, among other things, its ability to secure additional financing and to

achieve and maintain profitable operations.

The Company plans to issue additional equity and debt instruments to finance operating and working capital requirements, including additional issuances under the 2021 at-the-market program

discussed further below.

While the Company expects to obtain the additional financing that is needed, there is no assurance that the Company will be successful in obtaining the necessary funding for future operations.

factors raise substantial doubt as to the Company’s ability to continue as a going concern.

These factors raise

substantial doubt as to the Company’s ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

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Management believes that the financial institutions are financially sound, and accordingly, minimal credit risk exists with respect to the financial institutions.

As of March 31, 2022, the Company had deposits

As of June 30, 2022, the Company had deposits

that exceeded federally insured amounts by $ 16.5 million.

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balance sheets.

Subsequent changes in fair values are recorded in other (expense) income, net on the condensed consolidated statements of comprehensive loss.

Subsequent changes in fair values are recorded in other income (expense), net on the condensed consolidated statements of comprehensive loss.

The Company classifies investments available to fund current operations as

current assets on its balance sheets.

The Company did no t recognize any impairments on its investments to date through March

The Company did no t recognize any impairments on its investments to date through June

General and Administrative Expenses

General and administrative expenses (“G&A”) consist primarily of personnel-related costs, including salaries and

stock-based compensation costs, for personnel in functions not directly associated with research and development activities.

Other significant costs include legal fees relating to intellectual property and corporate matters, professional

fees for accounting and tax services, settlement costs with third parties and other services provided by business consultants.

Research and Development

General and administrative expenses (“G&A”) consist primarily of personnel-related costs, including salaries and stock-based

compensation costs, for personnel in functions not directly associated with research and development activities.

Other significant costs include legal fees relating to intellectual property and corporate matters, professional fees for

accounting and tax services, settlement costs with third parties and other services provided by business consultants.

Research and Development Expenses

Research and development expenses (“R&D”) consist of costs incurred in performing research and development activities, including

1 unchanged sentence

external service providers that conduct certain research and development, and an allocation of R&D related overhead expenses.

Other (Expense) Income, net

Other (expense) income, net includes payments made by the Company in connection with the

Other Income (Expense), net

Other income (expense), net includes payments made by the Company in connection with the

Contingent Value Rights Agreement discussed further below with former stockholders of Rexahn Pharmaceuticals, Inc.

In addition, Other (expense) income, net includes interest earned from cash and cash equivalent investments,

In addition, Other income (expense), net includes interest earned from cash and cash equivalent investments,

realized and unrealized gains (losses) from equity investments, and when they occur, reimbursements in connection with grants and other sources.

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation

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

Notes to Condensed Consolidated Financial Statements

Warrant Liabilities

4 unchanged sentences

The change in fair value of

the warrant liabilities while outstanding was recognized as a component of the fair value change in derivative and warrant liabilities line item in the condensed consolidated statements of comprehensive loss.

the warrant liabilities while outstanding was recognized as a component of the fair value change in warrant liabilities line item in the condensed consolidated statements of comprehensive loss.

Fair Value Measurements

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Level 1 inputs:

Unadjusted quoted prices for identical assets

or liabilities in active markets;

Unadjusted quoted prices for identical assets or liabilities in

active markets;

Level 2 inputs:

Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs

which are observable, whether directly or indirectly, for substantially the full term of the asset or liability;

Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are

observable, whether directly or indirectly, for substantially the full term of the asset or liability;

Level 3 inputs:

Unobservable inputs that reflect the

Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

As of March 31, 2022 and December 31, 2021, the fair

values of cash and cash equivalents, prepaid and other assets, accounts payable, accrued expenses and short-term loan approximated their carrying values because of the short-term nature of these assets or liabilities.

The fair value of the

short-term investments, while outstanding, were based on observable Level 1 inputs in the form of quoted market prices from a major stock exchange.

The fair value of the warrant liabilities, while outstanding, were based on cash flow models

discounted at current implied market rates evidenced in recent arms-length transactions representing expected returns by market participants for similar instruments and were based on Level 3 inputs.

There were no transfers between fair value hierarchy levels during the three months ended March 31, 2022 and 2021.

Unobservable inputs that reflect the Company’s own assumptions about

the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

As of June 30, 2022 and December 31, 2021, the fair

values of cash and cash equivalents, prepaid and other assets, accounts payable, accrued expenses and short-term loan, while outstanding, approximated their carrying values because of the short-term nature of these assets or liabilities.

The fair value of the short-term investments, while outstanding, were based on observable Level 1 inputs in the form of quoted market prices from a major stock exchange.

The fair value of the warrant liabilities, while outstanding, were

based on cash flow models discounted at current implied market rates evidenced in recent arms-length transactions representing expected returns by market participants for similar instruments and were based on Level 3 inputs.

There were no transfers between fair value hierarchy levels during the six months ended June 30, 2022 and 2021.

The fair value of financial instruments measured on a

recurring basis is as follows (in thousands):

As of March 31, 2022

As of June 30, 2022

Short-term investments

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The following table provides a roll-forward of short-term investments measured at fair value on a recurring basis using observable level

1 inputs for the three months ended March 31, 2022 and 2021 (in thousands):

1 inputs for the six months ended June 30, 2022 and 2021 (in thousands):

Short-term investments

2 unchanged sentences

Balance as of end of period

Notes to Condensed Consolidated Financial Statements

The following table provides a roll-forward of the

warrant liabilities measured at fair value on a recurring basis using unobservable level 3 inputs for the three months ended March 31, 2022 and 2021 (in thousands):

warrant liabilities measured at fair value on a recurring basis using unobservable level 3 inputs for the six months ended June 30, 2022 and 2021 (in thousands):

Warrant liabilities

3 unchanged sentences

Balance as of end of period

Notes to Condensed Consolidated Financial Statements

Recent Accounting Pronouncements

5 unchanged sentences

model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures.

The Company does not expect that the adoption of this ASU on January 1, 2023 will have a significant impact on its consolidated financial statements .

The Company does not expect that the adoption of this ASU on January 1, 2023 will have a significant impact on its condensed consolidated financial statements .

In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

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consideration is monetized by Rexahn or its affiliates, minus (iii) certain permitted deductions.

Notes to Condensed Consolidated Financial Statements

The CVRs are not transferable, except in certain limited circumstances, will not be certificated or evidenced by any instrument, will not accrue interest

1 unchanged sentence

The CVR Agreement will continue in effect until the later of the end of the CVR Term and the payment of all amounts payable thereunder.

As of March 31, 2022, no milestones had been accrued as there were no

additional potential milestones yet considered probable beyond those previously reported in the second and third quarter of calendar year 2021.

Notes to Condensed Consolidated Financial Statements

As of June 30, 2022, no milestones had been accrued as there were no

additional potential milestones yet considered probable beyond those previously reported in the second and third quarters of calendar year 2021.

Former Rexahn Warrants

2 unchanged sentences

subsequently repurchased according to the terms of the original warrant agreements.

As of March 31, 2022, 66,538 of the Rexahn

As of June 30, 2022, 63,734 of the Rexahn

warrants remained outstanding with exercise prices ranging from $ 38.40 to $ 146.88 per share with an average remaining contractual life of 1.5

Pre-Merger Financing

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 five directors of Ocuphire Pharma, Inc.,

prior to the Merger and one director of Rexahn upon closing of the Merger (the “Pre-Merger Financing”).

The Pre-Merger Financing also

included the issuance of Series A Warrants and Series B Warrants discussed further below.

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 five directors of Ocuphire Pharma, Inc., prior to the Merger and one director of Rexahn upon closing of the Merger (the “Pre-Merger Financing”).

The Pre-Merger Financing also included the issuance of Series A Warrants and Series B Warrants discussed

further below.

Waiver Agreements

Effective February 3,

2021, each investor that invested in the Pre-Merger Financing entered into a Waiver Agreement with the Company (collectively, the “Waiver Agreements”).

Pursuant to the Waiver Agreements, the investors 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 investors, grant certain registration rights

for the shares underlying the warrants.

The Waiver Agreements provide for the elimination 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).

Effective February 3, 2021, each investor that invested in the Pre-Merger Financing entered into a Waiver Agreement with

the Company (collectively, the “Waiver Agreements”).

Pursuant to the Waiver Agreements, the investors 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 investors, grant certain registration rights for the shares underlying the warrants.

The Waiver Agreements provide for the elimination 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 Agreements, 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 in the aggregate with respect to all

investors, eliminating any future resets.

Pursuant to the Waiver Agreements, the number of shares underlying all of the Series B Warrants was fixed in the aggregate with respect to all investors, eliminating

any future resets.

Series A Warrants

The Series A Warrants

were issued on November 19, 2020 at an initial exercise price of $ 4.4795 per share, were immediately exercisable upon issuance and have a

term of five years from the date of issuance.

The Series A Warrants are exercisable for 5,665,838 shares of common stock in the aggregate (without giving effect to any limitation on exercise contained therein) and were outstanding as of March 31, 2022.

the execution of the Waiver Agreements, the Series A Warrants were accounted for and classified as liabilities on the accompanying condensed balance sheets given certain price reset provisions not used for a fair valuation under a fixed for fixed

settlement scenario as required for equity balance sheet classification.

Upon the February 3, 2021 effective date of the Waiver Agreements, the Series A Warrants were reclassified to equity.

A final fair valuation of the Series A Warrants was

performed utilizing a Black Scholes model to estimate the aggregate fair value of the Series A Warrants prior to being re-classified as equity.

The Series A Warrants were issued on November 19, 2020 at an initial exercise price of $ 4.4795 per share, were immediately exercisable upon issuance and have a term of five years from the date of issuance.

The Series A Warrants are exercisable for 5,665,838

shares of common stock in the aggregate (without giving effect to any limitation on exercise contained therein) and were outstanding as of June 30, 2022.

Prior to the execution of the Waiver Agreements, the Series A Warrants were accounted for and

classified as liabilities on the accompanying condensed balance sheets given certain price reset provisions not used for a fair valuation under a fixed for fixed settlement scenario as required for equity balance sheet classification.

February 3, 2021 effective date of the Waiver Agreements, the Series A Warrants were reclassified to equity.

A final fair valuation of the Series A Warrants was performed utilizing a Black Scholes model to estimate the aggregate fair value of the

Series A Warrants prior to being re-classified as equity.

Input assumptions used were as follows:

risk-free interest rate 0.4 %;

expected volatility of 86.6 %;

expected life of 4.8 years;

volatility of 86.6 %;

expected life of 4.8

and expected dividend yield zero percent.

The underlying stock price used was the market price as quoted on Nasdaq as of February 3, 2021, the effective date of the Waiver Agreement.

The fair value change of the

Series A Warrants was $ 33.8 million and was recorded to the fair value change in warrant liabilities line item on the accompanying

condensed consolidated statements of comprehensive loss for the three months ended March 31, 2021.

As a result of the reclassification to equity, the Series A Warrants are no longer subject to remeasurement.

The underlying stock price used was the market price as quoted on Nasdaq as of

February 3, 2021, the effective date of the Waiver Agreement.

The fair value change of the Series A Warrants was $ 33.8 million and was

recorded to the fair value change in warrant liabilities line item on the accompanying condensed consolidated statements of comprehensive loss for the six months ended June 30, 2021.

As a result of the reclassification to equity, the Series A

Warrants are no longer subject to remeasurement.

Series B Warrants

The Series B Warrants

have an exercise price of $ 0.0001 , were exercisable upon issuance and will expire on the day following the later to occur of (i) the

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

The Series B Warrants outstanding as of March 31, 2022 were exercisable for 78,700 shares of common stock.

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

Series B Warrants have been exercised in full (without giving effect to any limitation on exercise contained therein) and no shares

remain issuable thereunder.

The Series B Warrants outstanding as of June 30, 2022 were exercisable for 78,701 shares of common stock.

The Series B Warrants were accounted for and classified as equity on the accompanying condensed balance sheets.

Notes to Condensed Consolidated Financial Statements

Commitments and Contingencies

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sales (See Note 9 — Apexian Sublicense Agreement).

As of March 31, 2022, there was sufficient uncertainty with regard to any future cash milestone payments under the sublicense agreement, and as such, no liabilities were recorded related

As of June 30, 2022, there was sufficient uncertainty with regard to any future cash milestone payments under the sublicense agreement, and as such, no liabilities were recorded related

to the sublicense agreement .

Notes to Condensed Consolidated Financial Statements

Facility Leases

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The rent expense associated with the HQ Lease and Rexahn Lease amounted to $ 9,000 and $ 50,000

during the three months ended March 31, 2022 and 2021, respectively.

Total remaining expected rental payments under the HQ Lease amount to $ 27,000

through its December 31, 2022 expiration date .

during the three months ended June 30, 2022 and 2021, respectively.

The rent expense associated with the HQ Lease and Rexahn Lease amounted to $ 21,000 and $ 98,000 during the six months ended June 30, 2022

and 2021, respectively.

Total remaining expected rental payments under the HQ Lease amount to $ 18,000 through its December

31, 2022 expiration date .

In the ordinary course of business, from time to time, the Company may be subject to a broad range of claims and legal proceedings that relate to contractual

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Property and Equipment, net

Property and equipment held for use by category are

presented in the following table (in thousands):

Property and equipment held for use by category are presented in the

following table (in thousands):

Total property and equipment

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Property and equipment, net

expense was $ 1 ,000 during each of the three months ended March 31, 2022 and 2021.

expense was $ 1 ,000 during each of the three month periods ended June 30, 2022 and 2021 and $ 2 ,000 during each of the six month periods ended June 30, 2022 and 2021.

Accrued Expenses

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$ 0.6 million in November 2021 related to financing an insurance policy.

The Loan is payable in six monthly installments of $ 108 ,000

The Loan was payable in six monthly installments of $ 108 ,000

beginning in December 2021.

The Loan has an annual interest rate of 5.5 % per annum.

Interest expense in the amount of $ 5 ,000 was recognized in connection with the Loan during the three months ended March 31, 2022.

The Loan had an annual interest rate of 5.5 % per annum.

Interest expense in the amount of $ 4 ,000 and $ 9 ,000 was

recognized in connection with the Loan during the three and six months ended June 30, 2022.

The final payment on the Loan was made in May 2022.

Related Party Transactions

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See Note 3 – Pre-Merger Financing.

On April 8, 2022, Ocuphire entered into a consulting agreement with a director of the Company.

The consulting

agreement provides for $ 10,000 a month in cash payments, effective as of April 1, 2022.

Additionally, on April 8, 2022, in

connection with the consulting arrangement, the director received a stock option grant for 50,000 options, 25 % of which will vest on March 31, 2023, with the remainder vesting in equal monthly installments over 36 months.

The Company incurred related consulting expenses of $ 30,000 during the three and six months ended June 30, 2022.

There were no related

consulting expenses incurred during the three and six months ended June 30, 2021.

$ 10,000 and none of the related consulting expenses were unpaid as of June 30, 2022 and December 31, 2021, respectively .

S tockholders’ Equity

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million (the “2021 ATM”).

During the three months ended March 31, 2022, 336,544 shares of common stock were sold under the

2021 ATM for gross proceeds in the amount of $ 1.2 million before deducting issuance expenses, including the placement agent’s

fees, legal and accounting expenses, in the amount of $ 35 ,000.

There were no sales of common stock under the 2021 ATM during the three-month period ended March 31, 2021.

During the three and six months ended June 30, 2022, 877,927 and 1,214,471 shares of common stock were sold under the 2021 ATM for aggregate gross proceeds in the amount of $ 1.9 million and $ 3.1 million,

respectively, before deducting issuance expenses, including the placement agent’s fees, legal and accounting expenses, in the amount of $ 53,000

and $ 88,000 , respectively.

During the three and six months ended June 30, 2021, 900,943 shares were sold under the 2021 ATM for gross proceeds in the amount of approximately $ 4.1 million, before deducting issuance expenses in the amount of approximately $ 0.2 million.

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”).

The RDO Warrants have an exercise price of $ 6.09 per share, are exercisable from the initial issuance date of June 8, 2021, and will expire five years following the initial issuance date.

As of March 31, 2022, 1,538,461

RDO Warrants were outstanding.

On June 4, 2021, the Company entered into a placement agency agreement for a registered direct offering (“RDO”) 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 one share and 0.50 RDO Warrants, for gross

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

The RDO Warrants have an exercise

price of $ 6.09 per share, are exercisable from the initial issuance date of June 8, 2021, and will expire five years following the initial issuance date.

As of June 30, 2022, 1,538,461 RDO Warrants were outstanding.

Stock-based Compensation

compensation expense was included in general and administrative and research and development costs as follows in the accompanying condensed consolidated statements of comprehensive loss for the three-month periods indicated below (in

(in thousands):

General and administrative

1 unchanged sentence

Total stock-based compensation

Ocuphire Stock Options

Inducement Plan

On February 22, 2021, the Company

adopted the Ocuphire Pharma, Inc.

Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 325,258

shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company

within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

Notes to Condensed Consolidated Financial Statements

Ocuphire Stock Options

On February 22, 2021, the Company adopted the

Ocuphire Pharma, Inc.

Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 325,258 shares of its

common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the

meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

Incentive Plan

The stockholders of the Company approved the 2020 Equity

Incentive Plan (the “2020 Plan”) for stock-based awards.

The stockholders of the Company approved the 2020

Equity Incentive Plan (the “2020 Plan”) for stock-based awards.

The 2020 Plan became effective on November 5, 2020.

1 unchanged sentence

new shares of common stock were reserved for issuance and (ii) up to 70,325 additional shares of common stock may be issued,

consisting of (A) shares that remain available for the issuance of awards under prior equity plans and (B) shares of common stock subject to outstanding stock options or other awards covered by prior equity plans that have been cancelled or

expire on or after the date that the 2020 Plan became effective.

or expire on or after the date that the 2020 Plan became effective.

The 2020 Plan permits the grant of incentive and nonstatutory stock options, appreciation rights, restricted stock, restricted stock units, performance stock and net loss

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On January 1, 2022, 942,291 shares were added to the 2020 Plan as a result of the evergreen provision.

During the three months ended March 31, 2022 and 2021, 552,305 and 41,800 options were

granted to officers, and employees and consultants, respectively, generally vesting over a six ( 6 ) to forty-eight ( 48 ) month period.

The Company recognized $ 417 ,000

and $ 446 ,000 in stock-based compensation expense related to stock options during the three months ended March 31, 2022 and 2021,

respectively.

As of March 31, 2022 and December 31, 2021, 2,616,544 and 2,096,836 stock options were outstanding, respectively.

The weighted average fair value per share of options

granted during the three months ended March 31, 2022 and 2021 was $ 2.29 and $ 6.71 , respectively.

The Company measures the fair value of stock options with service‑based and performance‑based vesting criteria to employees, directors, consultants

and directors on the date of grant using the Black‑Scholes option pricing model.

The Company does not have sufficient share trading history to support a calculation of volatility and expected term.

As such, the Company has used a weighted

average volatility considering the volatilities of several guideline companies.

During the three and six months ended June 30, 2022, 174,000 and 726,305 stock

options were granted to directors, officers, employees and consultants, respectively, generally vesting over a twelve ( 12 ) to

forty-eight ( 48 ) month period.

During the three and six months ended June 30, 2021, 218,000 and 259,800 stock options were granted to

newly-hired consultants and employees, respectively, generally vesting over a six ( 6 ) to forty-eight ( 48 ) month period.

The Company recognized $ 418 ,000 and

$ 434 ,000 in stock-based compensation expense related to stock options during the three months ended June 30, 2022 and 2021,

respectively, and $ 835 ,000 and $ 880 ,000

during the six months ended June 30, 2022 and 2021, respectively.

During the six months ended June 30, 2022, 24,309 stock

options were exercised with an intrinsic value of $ 59,000 .

During the six months ended June 30, 2021, 7,386 stock options were exercised with an intrinsic value of $ 74,000 .

The weighted average fair value per share of options granted during the

three and six months ended June 30, 2022 was $ 1.71 and $ 2.15 , respectively.

The weighted average fair value per share of options granted during the three and six months ended June 30, 2021 was $ 4.50 and $ 4.85 .

measures the fair value of stock options with service-based and performance-based vesting criteria to employees, directors, consultants and directors on the date of grant using the Black-Scholes option pricing model.

The Company does

not have history to support a calculation of volatility and expected term.

As such, the Company has used a weighted-average volatility considering the volatilities of several guideline companies.

Notes to Condensed Consolidated Financial Statements

For purposes of identifying similar entities, the

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The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future.

expected life of the options was based on the contractual term for agreements that allow for exercise of vested options through the end of the contractual term upon termination of continuous service, and for all other agreements, was based

on the midpoint between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110.

The risk-free interest rate is determined by reference to implied yields

available from U.S.

based on the midpoint between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110.

The risk-free interest rate is determined by reference to implied

yields available from U.S.

Treasury securities with a remaining term equal to the expected life assumed at the date of grant.

The Company records forfeitures when they occur.

The weighted average assumptions used in the

Black‑Scholes option pricing model are as follows during the three months ended March 31, 2022 and 2021:

The weighted‑average assumptions used

in the Black-Scholes option pricing model are as follows during the three and six months ended June 30, 2022 and 2021:

Expected stock price volatility

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Risk free interest rate

three months ended March 31, 2022 and 2021, 62,698 and 118,217 stock options vested, respectively.

The weighted average fair value per share of options vesting during the three months ended March 31, 2022 and 2021 was $ 2.90 and $ 3.66 , respectively.

During the three months ended March 31, 2022 and 2021, 24,309 and 7,386 stock options were exercised, respectively, with an intrinsic value of $ 59 ,000 and $ 74 ,000, respectively.

three months ended March 31, 2022 and 2021, 8,288 and zero options were forfeited, respectively.

As of March 31, 2022, 1,280,792

shares were available for future issuance under the 2020 Plan and Inducement Plan in the aggregate.

No shares were available for

future issuance under the 2018 Plan.

stock-based compensation cost was $ 3.3 million as of March 31, 2022.

During the three and six months ended June 30, 2022, 204,406 and 267,103 stock options vested, respectively.

During the three and six months ended June 30, 2021 , 114,727 and 232,944 stock options vested (as

adjusted for the Exchange Ratio), respectively.

During the three and six months ended June 30, 2022 , 6,000 and 14,288 options were forfeited, respectively.

During the three and six months ended June 30, 2021 , 25,558 options were forfeited.

As of June 30, 2022, 1,098,645 shares were available for future issuance under the 2020 Plan and Inducement Plan.

shares were available for future issuance under the 2018 Plan.

stock-based compensation cost was $ 3.2 million as of June 30, 2022.

The unrecognized stock-based expense is expected to be

recognized over a weighted average period of 1.4 years.

Notes to Condensed Consolidated Financial Statements

Ocuphire Restricted Stock Awards

The Company did

no t grant any restricted stock awards (RSAs) during any of the periods presented.

The RSAs granted in previous periods were

subject to various vesting schedules.

During the three months ended March 31, 2022 and 2021, zero and 40,000 RSAs vested, respectively, and no

RSAs were forfeited during the periods presented.

The stock-based compensation expense attributed to the RSAs during the three months ended March 31, 2022 and 2021 was zero and $ 22 ,000, respectively.

The Company did no t grant any restricted stock awards (RSAs) during any of the periods

The RSAs granted in previous periods were subject to various vesting schedules.

During the six months ended June 30, 2022 and 2021, zero and 40,000 RSAs vested, respectively, and no RSAs were forfeited during the periods presented.

The stock-based compensation expense attributed to the RSAs during the six months

ended June 30, 2022 and 2021 was zero and $ 22,000 , respectively.

Common Stock Issued for Services

granted stock for services in the amount of 8,024 and 4,474 common shares to two board members who elected

to receive their board retainers in the form of stock for services performed during the three months ended March 31, 2022 and 2021, respectively.

The stock-based compensation related to these services amounted to $ 28 ,000 and $ 26 ,000 during the

three months ended March 31, 2022 and 2021, respectively.

Former Rexahn Options

There were 82 outstanding, unexercised and vested options to purchase common stock granted under the Rexahn Pharmaceuticals Stock Option Plan, as

amended (the “Rexahn 2003 Plan”), as of March 31, 2022 and December 31, 2021.

The exercise prices related to the outstanding options granted under the Rexahn 2003 Plan was $ 182.40 per share with an average remaining contractual life of 0.2

granted stock for services in the amount of 14,147 and 4,923 common shares to two board members who

elected to receive their board retainers in the form of stock for services performed during the three months ended June 30, 2022 and 2021, respectively, and 22,171 and 9,397 common shares during the six months ended June 30, 2022 and 2021,

respectively.

The stock-based compensation related to these services amounted to $ 27 ,000 and $ 29 ,000 during the three months ended June 30, 2022 and 2021, respectively, and $ 55 ,000 during each of the six months ended June 30, 2022 and 2021.

Rexahn Options

Zero and 123 outstanding,

unexercised and vested options to purchase Common Stock granted under the Rexahn Pharmaceuticals Stock Option Plan, as amended (the “Rexahn 2003 Plan”), remained outstanding as of June 30, 2022 and December 31, 2021, respectively.

D uring the three and six months

ended June 30, 2022, 82 and 123

options expired .

Notes to Condensed Consolidated Financial Statements

Apexian Sublicense Agreement

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If it is not terminated pursuant to its terms, the Apexian Sublicense Agreement shall remain in effect until expiration of the last to expire of the covered patents.

None of the milestone or royalty

payments were triggered or deemed probable as of March 31, 2022 or December 31, 2021.

None of the criteria to recognize

milestone or royalty obligations were met during the three and six month periods ended June 30 , 2022 and 2021.

Net loss per share

5 unchanged sentences

stock options while outstanding are considered common stock equivalents for this purpose.

Diluted earnings is computed utilizing the treasury method for the warrants, unissued common stock for services and stock options.

Diluted earnings are computed utilizing the treasury method for the warrants, unissued common stock for services and stock options.

No incremental

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The following

potential common shares were not considered in the computation of diluted net loss per share as their effect would have been anti-dilutive for the three-month periods ended presented below:

potential common shares were not considered in the computation of diluted net loss per share as their effect would have been anti-dilutive for the three and six month periods ended presented below:

Series A, Series B, and RDO warrants

3 unchanged sentences

Former Rexahn options

Notes to Condensed Consolidated Financial Statements

The effective

tax rate for the three months ended March 31, 2022 and 2021 was zero percent.

As of March 31, 2022, a full valuation

tax rate for the three and six months ended June 30, 2022 and 2021 was zero percent.

As of June 30, 2022, a full valuation

allowance has been established to reduce the Company’s net deferred income tax assets.

1 unchanged sentence

the Company’s pre-tax loss was recognized for any of the periods presented.

The Company’s corporate returns

are subject to examination for tax years beginning in 2018 for federal income tax purposes and subject to examination in various state jurisdictions.

The Company does not have any reserves for income taxes that represent the Company’s

potential liability for uncertain tax positions.

The Company’s corporate returns are subject to examination for tax years beginning in 2018 for federal income tax purposes and subject to examination in various state jurisdictions.

The Company does not have any reserves for

income taxes that represent the Company’s potential liability for uncertain tax positions.

Deferred Compensation Plan

Effective October 1 st, 2021, the Company began offering a 401 (k) plan (“ 401 K Plan”) to its employees.

All employees are eligible to participate in the 401 K

The Company makes matching contributions equal to 100 % on the first 3 % of compensation that is deferred as an elective deferral and an additional 50 % on the next 2 % of compensation.

The Company’s matching

contributions are made on a payroll-by-payroll basis.

During the three months ended March 31, 2022, the Company contributed $ 25,000 to the 401 K

Subsequent Events

On April 8, 2022, Ocuphire entered into a consulting agreement with Jay Pepose, a director of the Company.

consulting agreement provides for $ 10,000 a month in cash payments, effective as of April 1, 2022.

Additionally, on April 8,

2022, in connection with the consulting arrangement, Dr.

Pepose received a stock option grant for 50,000 options, 25 % of which will vest on March 31, 2023, with the remainder vesting in equal monthly installments over 36 months .

Effective October 1 st, 2021, the Company began offering a

401 (k) plan (“ 401 K Plan”) to its employees.

All employees are eligible to participate in the 401 K Plan.

The Company makes matching contributions equal to 100 % on the first 3 % of compensation that is deferred as an

elective deferral and an additional 50 % on the next 2 % of compensation.

The Company’s matching contributions are made on a payroll-by-payroll basis.

During the three and six months ended June 30 , 2022, the Company

contributed $ 20,000 and $ 45,000 to the 401 K Plan, respectively.

Ocuphire Pharma, Inc.

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

What changed 10-Q

Item 1. Financial Statements