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Item 2. Management’s Discussion and Analysis

2023-08-11 compared with 2023-05-15 · 320 added, 225 removed, 252 unchanged (68% of the section changed)

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

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes included in Part I

“Financial Information”, Item I “Financial Statements” of this Quarterly Report on Form 10-Q (the “Report”) and the audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31,

The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited financial statements and notes included in Part

I “Financial Information”, Item I “Financial Statements” of this Quarterly Report on Form 10-Q (the “Report”) and the audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31,

Forward-Looking Statements

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

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

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

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

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

These forward-looking statements reflect our management’s beliefs and views with respect to future events, are based on estimates and assumptions as of the date of this Report and are subject to

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statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable laws or regulations.

We are a clinical-stage ophthalmic biopharmaceutical company focused on developing novel therapies for the treatment of unmet needs of patients with retinal and refractive eye disorders .

Our lead retinal 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 our in-licensing

this 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 (hepatic) and

oncology indications, and had demonstrated evidence of target engagement, pharmacokinetics, durability, and favorable safety and tolerability.

We also in-licensed APX2009 and APX2014, which are second-generation product candidates and analogs of

In January 2023, we reported top-line efficacy and safety results from the ZETA-1 Phase 2 trial conducted in 103 subjects (51 treated with 600 mg daily dose of APX3330) in DR, including moderately severe non-proliferative DR (“NPDR”) and

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

Although the ZETA-1 clinical trial did not meet the primary endpoint of % of patients with a ≥ 2-step improvement in Early Treatment of Diabetic

Retinopathy Study (ETDRS) diabetic retinopathy severity scale (DRSS) at week 24 in the study eye, statistical significance was achieved on a key pre-specified secondary endpoint of preventing clinically meaningful progression of diabetic

retinopathy (defined by binocular 3 or more steps worsening on the DRSS scale, calculated as the sum of changes in each eye) after 24 weeks of treatment.

Given the systemic delivery of APX3330, an endpoint that evaluates the effects on both eyes

is a potential FDA registration endpoint for future trials.

The binocular DRSS endpoint will be confirmed at an End-of-Phase 2 (EOP2) meeting with the FDA in the second half of 2023.

APX3330 demonstrated favorable safety and tolerability in the

ZETA-1 trial, consistent with the safety data from the prior 11 clinical trials.

We are a clinical-stage ophthalmic biopharmaceutical company focused on developing novel therapies for the treatment of unmet needs of patients with retinal and

refractive eye disorders .

Our lead retinal product candidate, APX3330, is a first-in-class small-molecule inhibitor of Ref-1 (reduction oxidation effector factor-1 protein).

Ref-1 is a regulator of

transcriptor factors such as HIF-1α and NF-kB.

Inhibiting REF-1 reduces levels of vascular endothelial growth factor (VEGF) and inflammatory cytokines which are known to play key roles in ocular angiogenesis and inflammation.

Through inhibition

of Ref-1, APX3330 normalizes the levels of VEGF to physiologic levels, unlike biologics that abolish the VEGF levels required for normal function.

APX3330 is an oral tablet administered twice per day for the treatment of diabetic retinopathy

(“DR”) and diabetic macular edema (“DME”).

DR affects approximately 10 million people with diabetes and is projected to impact 14.6 million Americans by 2050.

classified as Non-Proliferative Diabetic Retinopathy (“NPDR”), the early stage of the disease in which symptoms may be mild or nonexistent or Proliferative Diabetic Retinopathy (“PDR”) which is the more advanced stage of diabetic eye

disease that can be highly symptomatic with loss of vision.

Approximately 80% of the DR patients have NPDR that will progress to PDR if left untreated.

Despite the risk for visual loss associated with this disease, over 90% of NPDR patients

currently receive no course of treatment apart from observation by their eye care specialist until they develop sight-threatening complications.

This is due to the burdensome and frequent eye injections currently required with currently

approved therapies for this disease.

APX3330 as an oral tablet has the potential to be an early, non-invasive treatment for the 8 million NPDR patients in the US.

In January 2023, we reported top-line efficacy and safety results from the ZETA-1 Phase 2 trial conducted in 103 subjects (51 treated with 600 mg daily dose of APX3330) in DR, including

moderately severe non-proliferative DR (“NPDR”) and mild proliferative DR (“PDR”), as well as patients with DME without loss of central vision.

Although administration of APX3330 daily did not meet the study’s primary endpoint of % of patients

with a ≥ 2-step improvement in Early Treatment of Diabetic Retinopathy Study (“ETDRS”) diabetic retinopathy severity scale (“DRSS”) in the study eye at week 24 compared to placebo, statistical significance was achieved on a key pre-specified

secondary endpoint of preventing clinically meaningful progression of diabetic retinopathy (defined by binocular 3 or more steps worsening on the DRSS scale, calculated as the sum of the change in DRSS in the study eye and fellow eye) after 24

weeks of treatment.

Given the systemic delivery of APX3330, an endpoint that evaluates the effects on both eyes is a potential FDA registration endpoint for future trials.

The binocular ≥3-step worsening in DRSS endpoint will be confirmed at an

End-of-Phase 2 (“EOP2”) meeting with the FDA in the fourth quarter of 2023.

Ocuphire Pharma, Inc.

Prior to Ocuphire in-licensing the APX3330 product candidate, it had been studied by other sponsors in a total of 11 clinical trials (6 Phase 1 and 5 Phase 2) in a total of over 420 healthy

volunteers or patients (with over 340 APX3330-treated) for inflammatory (hepatic) and oncology indications, and had demonstrated evidence of target engagement, consistent pharmacokinetics, durability, and favorable safety and tolerability.

Treatment-related adverse events were uncommon, and most were mild in severity.

There were no treatment-related serious adverse events.

No changes were observed in

liver, kidney, or heart function.

There were no treatment-related effects on hematologic or blood chemistry evaluations.

No clinically significant changes were observed in liver, kidney, or heart function.

There were no treatment-related effects on hematologic or blood chemistry

APX3330 demonstrated favorable safety and tolerability in the ZETA-1 trial, consistent with the safety data from the prior 11 clinical trials.

We also in-licensed APX2009 and APX2014, which are second-generation analogs of APX3330.

The unique dual mechanism of action of these Ref-1 inhibitors of reducing angiogenesis

and inflammation could potentially be beneficial in treating other retinal diseases such as age-related macular degeneration (“AMD”), and geographic atrophy (“GA”).

We are currently evaluating local delivery routes in addition to the systemic

(oral) route as part of its pipeline expansion in retinal therapies.

In November 2022, we entered into a license and collaboration agreement (the “Nyxol License Agreement”) with FamyGen Life Sciences, Inc.

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(“Viatris”) in January 2023) pursuant to which we granted Viatris an exclusive license to develop, manufacture, import, export and commercialize our refractive product candidate

phentolamine ophthalmic solution 0.75% (Nyxol ® Eye Drops or “Nyxol”) .

Ocuphire Pharma, Inc.

phentolamine ophthalmic solution 0.75% (Nyxol ® Eye Drops or “Nyxol”) for treating (a) reversal of mydriasis, (b) night vision

disturbances or dim light vision, and (c) presbyopia, and (ii) Nyxol and low dose pilocarpine for treating presbyopia (together, the “Nyxol Products”) worldwide except for certain countries and jurisdictions in Asia (the “Viatris Territory”).

Under the terms of the Nyxol License Agreement, Ocuphire in partnership with Viatris, will develop the Nyxol Products in the United States.

Viatris will reimburse us for

budgeted costs related to the development of the Nyxol Products through FDA approval.

Viatris will be responsible for developing the Nyxol Products in countries and jurisdictions in the Viatris Territory outside of the United States.

Nyxol is a once-daily eye drop formulation of phentolamine mesylate designed to reduce pupil diameter and improve visual acuity.

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promising clinical data across the three targeted refractive indications.

We submitted a new drug application (“NDA”) to the U.S.

Food and Drug Administration (“FDA”) in November 2022 under the 505(b)(2) pathway for Nyxol for RM with a Prescription Drug User Fee Act

(PDUFA) goal date of September 28, 2023.

Upon approval of Nyxol for RM, as per the Nyxol License Agreement, we will receive a $10 million milestone payment.

We reported positive topline data from multiple late-stage clinical trials for Nyxol in RM, presbyopia and DLD.

We reported positive top-line data from Phase 3 trials in RM:

MIRA-2 in March 2021, MIRA-3 in March 2022 and MIRA-4 in April 2022.

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

MIRA-2 in March 2021,

MIRA-3 in March 2022 and MIRA-4 in April 2022.

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

hydrochloride ophthalmic solution 0.4%, “LDP”) as adjunctive therapy (VEGA-1).

We reported top-line data from a Phase 3 trial in DLD in May 2022 (LYNX-1).

We submitted a new drug application (“NDA”) to the U.S.

Food and Drug

Administration (“FDA”) in November 2022 under the 505(b)(2) pathway for Nyxol for RM with a Prescription Drug User Fee Act (PDUFA) goal date of September 28, 2023.

The first phase 3 registration trial of Nyxol for the treatment of presbyopia

(VEGA-2), as monotherapy and with LDP as adjunctive therapy, was started in late December 2022 , and topline results from this trial are expected in late 2023 .

Funded by our partner Viatris, registration trials are planned for presbyopia (VEGA-3) and DLD (LYNX-2), as well as a supportive long-term safety trial for both chronic

indications (LYRA-1).

As part of its our strategy, we 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.

Funded by our partner, Vitaris, the first phase 3 registration trial of Nyxol for

the treatment of presbyopia (VEGA-2), as monotherapy and with LDP as adjunctive therapy, was started in late December 2022, and topline results from this trial are expected in Q4 2023.

Also funded by our partner Viatris, registration trials are

planned for presbyopia and DLD as well as a supportive long-term safety trial for chronic use of Nyxol in refractive indications.

Strategic Outlook

We will continue to explore opportunities to acquire additional ophthalmic assets and to seek strategic partners for late-stage development, regulatory preparation and

commercialization of APX3330 in key global markets.

To date, our primary activities have been conducting research and development activities, planning clinical trials, performing business and financial planning, recruiting personnel and raising

We do not have any products approved for sale, and we do not expect to consistently generate significant revenues, other than license and collaborations revenue, until, and unless, the FDA or other regulatory authorities approve and we

successfully commercialize APX3330.

Until such time, if ever, as we can consistently generate substantial product revenue, we expect to finance our cash needs through a combination of equity and debt financings as well as through

collaborations, strategic alliances and licensing arrangements.

Through March 31, 2023, we have funded our operations primarily through equity financings that totaled $54.1 million in gross proceeds, of which $21.15 million was received

in connection with the merger (“Merger”) with Rexahn Pharmaceuticals, Inc.

We will continue to explore opportunities to acquire additional ophthalmic assets, expand current pipeline to other retinal indications with APX3330, APX2009 and APX2014, and to

seek strategic partners for late-stage development, regulatory preparation and commercialization of APX3330 in key global markets.

To date, our primary activities have been conducting research and development activities, planning clinical

trials, performing business and financial planning, recruiting personnel and raising capital.

We do not have any products approved for sale, and we do not expect to consistently generate significant revenues, other than license and

collaborations revenue, until, and unless, the FDA or other regulatory authorities approve and we successfully commercialize APX3330.

Until such time, if ever, as we can consistently generate substantial product revenue, we expect to finance

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

Through June 30, 2023, we have funded our operations primarily through equity financings that totaled $54.1 million in gross proceeds, of which $21.15 million was received in

connection with the merger (“Merger”) with Rexahn Pharmaceuticals, Inc.

(“Rexahn”) and through the issuance of convertible notes in private placements that totaled $8.5 million in gross proceeds net cash.

In addition, we recently received a

one-time non-refundable licensee fee payment of $35.0 million and reimbursement for costs related to development in connection with the Nyxol License Agreement.

Our net loss was $5.8 million for the three months ended March 31, 2023 as compared to a net loss of $6.6 million for the three months ended March 31, 2022.

31, 2023, we had an accumulated deficit of $77.3 million.

In addition, we have received a

one-time non-refundable licensee fee payment of $35.0 million in the fourth quarter of 2022 and reimbursement for costs related to development in connection with the Nyxol License Agreement.

Ocuphire Pharma, Inc.

Our net loss was $10.8 million for the six months ended June 30, 2023 as compared to a net loss of $11.5 million for the six months ended June 30, 2022.

As of June 30, 2023, we

had an accumulated deficit of $82.2 million.

Furthermore, we anticipate that our expenses will increase as we:

continue clinical trials for APX3330, Nyxol and for any other product candidate in our future pipeline;

continue preclinical studies for APX3330, Nyxol and for any other product candidate in our future pipeline;

continue preclinical studies for APX3330, APX2009 and APX2014, Nyxol and for any other product candidate in our future pipeline;

develop additional product candidates that we identify, in-license or acquire;

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establish on our own or with partners, a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval.

Our net income (loss) will likely continue to fluctuate significantly from quarter to quarter and year to year, depending on the timing of our preclinical studies, clinical trials, expenditures on other research

and development activities (and reimbursement thereof), and from potential milestone payments received from and revenue earned under the Nyxol License Agreement or any other license and collaboration agreements that we enter into, and potential

payments we that may become payable from time to time under the Apexian Sublicense Agreement.

Ocuphire Pharma, Inc.

Our net income (loss) will likely continue to fluctuate significantly from quarter to quarter and year to year, depending on the timing of our preclinical studies, clinical

trials, expenditures on other research and development activities (and reimbursement thereof), and from potential milestone payments received from and revenue earned under the Nyxol License Agreement or any other license and collaboration

agreements that we enter into, and potential payments we that may become payable from time to time under the Apexian Sublicense Agreement.

Recent Developments

Clinical Milestones

In January 2023, we announced topline efficacy and safety results from ZETA-1, a Phase 2b trial of APX3330 in diabetic

retinopathy patients.

In ZETA - 1, APX3330 demonstrated statistical significance on a key pre-specified endpoint, binocular DRSS worsening, which is a potential registration

endpoint for DR.

These results, along with a favorable systemic and ocular safety profile , support our plans to move forward to an End-of-Phase 2 meeting with the FDA.

In January 2023, we announced the initiation of the VEGA-2

Phase 3 pivotal trial, the first of two Phase 3 registration trials intended to support a presbyopia indication for Nyxol alone and Nyxol with LDP.

Topline results from this trial are expected in late 2023 .

Funded by our partner Viatris, registration trials are planned for presbyopia (VEGA-3) and DLD

(LYNX-2), as well as a supportive long-term safety trial for both chronic indications (LYRA-1).

In January 2023, we announced topline efficacy and safety results from ZETA-1, a Phase 2b trial of APX3330 in diabetic retinopathy patients.

In ZETA-1, APX3330 demonstrated

statistical significance on a key pre-specified endpoint, binocular DRSS worsening, which is a potential registration endpoint for DR and demonstrated favorable safety and tolerability.

In January 2023, we announced the initiation of the VEGA-2 Phase 3 pivotal trial, the first of two Phase 3 registration trials intended to support a presbyopia

indication for Nyxol alone and Nyxol with LDP.

The study has completed enrollment period and topline results from this trial are expected in Q4 2023.

Funded by our partner Viatris, registration

trials are planned for presbyopia and DLD, as well as a supportive long-term safety trial for chronic use of Nyxol in refractive indications.

Regulatory Update

In January 2023, we announced that the FDA has accepted for review the NDA for Nyxol for the treatment of pharmacologically-induced mydriasis (RM).

The FDA assigned

a Prescription Drug User Fee Act (PDUFA) action date of September 28, 2023.

Upon approval of Nyxol for RM by the FDA, Viatris would owe Ocuphire a $10 million milestone payment under the Nyxol License Agreement.

The FDA assigned a

Prescription Drug User Fee Act (PDUFA) action date of September 28, 2023.

If approved for RM by the FDA, Viatris would owe Ocuphire a $10 million milestone payment under the Nyxol License Agreement.

In July 2023, we announced the confirmation of the End-of-Phase 2 meeting with the FDA for APX3330 in Q4 2023.

CEO Transition

On April 19, 2023, the Company terminated the employment of Mina Sooch, the former President and Chief Executive Officer of the Company, and appointed Richard Rodgers as the

Company’s interim President and Chief Executive Officer.

On June 8, 2023, the Company entered into a Separation and Release Agreement with Ms.

Ocuphire Pharma, Inc.

Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”)

On August 10 , 2023, we entered into a common stock

purchase agreement (the “Purchase Agreement”) with Lincoln Park, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Ocuphire has the sole right, but not the obligation, to direct Lincoln Park

to purchase up to $50 million of shares of our common stock, par value $0.0001 (the “Common Stock”), from time to time over the 30-month term of the Purchase Agreement.

Concurrently with entering into the Purchase Agreement, Ocuphire also

entered into a registration rights agreement with Lincoln Park (the “Registration Rights Agreement”), pursuant to which we agreed to register the resale of the shares of our Common Stock that have been and may be issued to Lincoln Park under

the Purchase Agreement pursuant to a registration statement.

Upon the execution of the Purchase Agreement, we issued 246,792 shares of Common Stock to Lincoln Park as consideration for its commitment to purchase shares of our Common Stock

under the Purchase Agreement.

Lincoln Park has agreed not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of our Common Stock.

Global Economic Conditions

Generally, worldwide economic conditions remain uncertain, particularly due to the effects of the conflict between Russia and Ukraine, disruptions in the banking system and

financial markets, lingering COVID-19 pandemic and increased inflation.

financial markets, lingering COVID-19 pandemic, increased inflation and increased interest rates.

The general economic and capital market conditions both in the U.S.

and worldwide, have been volatile in the past and at times have adversely affected our access to capital

and increased the cost of capital.

and worldwide, have been volatile in the past and at times have adversely

affected our access to capital and increased the cost of capital.

The capital and credit markets may not be available to support future capital raising activity on favorable terms.

If economic conditions decline, our future cost of equity or debt capital and access to the

capital markets could be adversely affected.

If economic conditions decline, our future cost of equity or

debt capital and access to the capital markets could be adversely affected.

Additionally, our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors.

Changes in economic

conditions, supply chain constraints, logistics challenges, labor shortages, the conflict in Ukraine, disruptions in the banking system and financial markets, and steps taken by governments and central banks, particularly in response to the

COVID-19 pandemic as well as other stimulus and spending programs, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.

Changes in economic conditions,

supply chain constraints, logistics challenges, labor shortages, the conflict in Ukraine, disruptions in the banking system and financial markets, and steps taken by governments and central banks, particularly in response to the COVID-19

pandemic as well as other stimulus and spending programs, have led to higher inflation, which has led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates.

Financial Operations Overview

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however, the attainment of milestones or level of sales required to earn royalty payments is highly uncertain for the reasons explained below.

To date, outside of the license and collaborations revenue referenced above, we do not expect to generate significant revenue unless or until regulatory approval is

obtained and commercialization begins for APX3330 or Nyxol.

If we fail to complete the development of APX3330, Nyxol, or any other product candidate we may pursue in the future, in a timely manner, or fail to obtain regulatory approval, our

ability to generate significant revenue would be compromised.

Ocuphire Pharma, Inc.

To date, outside of the license and collaborations revenue referenced above, we do not expect to generate significant revenue unless or until regulatory approval is obtained and

commercialization begins for APX3330 or Nyxol.

If we fail to complete the development of APX3330, Nyxol, or any other product candidate we may pursue in the future, in a timely manner, or fail to obtain regulatory approval, our ability to

generate significant revenue would be compromised.

Operating Expenses

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General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation costs, for personnel in

functions not directly associated with research and administrative activities.

Other significant costs include insurance coverage for directors and officers and other property and liability exposures, legal fees relating to intellectual

property and corporate matters, professional fees for accounting and tax services, other services provided by business consultants and legal settlements.

General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation costs, for personnel in functions not

directly associated with research and administrative activities.

Other significant costs include insurance coverage for directors and officers and other property and liability exposures, legal fees relating to intellectual property and

corporate matters, professional fees for accounting and tax services, other services provided by business consultants and legal settlements.

Ocuphire Pharma, Inc.

Research and Development Expenses

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

Research and development expenses consist of

costs incurred in performing research and development activities, including compensation and benefits for research and development employees and costs for consultants, costs associated with preclinical studies and clinical trials, regulatory

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.

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Research and development activities are central to our business model.

We expect that APX3330 and Nyxol will have higher development costs during the later stages of clinical development, as compared to costs incurred during their earlier

stages of development, primarily due to the increased size and duration of the later-stage clinical trials.

We expect that APX3330 and Nyxol will have higher development costs during the later stages of clinical development, as compared to costs incurred during their earlier stages of

development, primarily due to the increased size and duration of the later-stage clinical trials.

We expect our research and development expenses to increase over the next several years.

However, it is difficult for us to determine

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

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

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

However, it is difficult for us to determine with

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

The duration, costs and timing of clinical trials and development of APX3330,

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

per patient trial costs;

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The short-term loan was fully repaid in May 2022.

Fair Value Change in Warrant Liabilities

The fair value change in warrant liabilities consists of the change in the fair value of the warrant liabilities during the period they are outstanding.

Ocuphire Pharma, Inc.

Other Income (Expense), net

Other income (expense), 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 income (expense), net also includes interest earned from cash and cash equivalent investments, realized and unrealized gains (losses) from equity investments and reimbursements in connection with

grants and other sources when they occur.

Other income (expense), net reflected in this line item includes interest earned from cash and cash equivalent investments, realized and unrealized gains (losses) from equity

investments and reimbursements in connection with grants and other sources when they occur.

In addition, other income (expense), net also includes payments when made by us in connection with the Contingent Value Rights Agreement (the “CVR

Agreement”) with former Rexahn shareholders.

Provision for Income Taxes

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A full valuation allowance has been provided on the net deferred tax assets as

of March 31, 2023 and December 31, 2022.

of June 30, 2023 and December 31, 2022.

Ocuphire Pharma, Inc.

Results of Operations

Comparison of Three Months Ended March 31, 2023 and 2022

Comparison of Three Months Ended June 30, 2023 and 2022

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

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Interest expense

Fair value change in warrant liabilities

Other income (expense), net

Other income, net

Loss before income taxes

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License and Collaborations Revenue

License and collaborations revenue was $1.7 million for the three months ended March 31, 2023.

There was no license and collaboration revenue during the three months ended March 31, 2022.

Revenue during the first quarter of 2023 was derived from the reimbursement of research and development services under the Nyxol License Agreement.

License and collaborations revenue was $3.7 million for the three months ended June 30, 2023.

There was no license and collaborations revenue during the three months ended June 30, 2022.

Revenue during the second quarter of 2023 was derived from the reimbursement of research and development services under the Nyxol License Agreement.

General and Administrative

General and administrative expenses for the three months ended March 31, 2023 were $2.3 million compared to $1.7 million for the three months ended March 31, 2022.

General and administrative expenses for the three months ended June 30, 2023 were $4.3 million compared to $1.8 million for the three months ended June 30, 2022.

The increase period over period

of $0.5 million was primarily attributable to an increase in stock-based compensation of $0.2 million, professional services of $0.1 million, legal support of $0.2 million and business development activities of $0.1 million, offset in part by a

decrease in payroll and insurance costs of $0.1 million on a net basis.

General and administrative expenses included $0.5 million and $0.3 million in stock-based compensation expense during the three months ended March 31, 2023 and 2022,

respectively.

of $2.6 million was primarily attributable to severance costs associated with the departure of our former Chief Executive Officer in the amount of $1.2 million, stock-based compensation of $0.9 million, professional services of $0.1 million,

legal support of $0.1 million and personnel related and other costs of $0.3 million on a net basis.

General and administrative expenses included $1.2 million and $0.3 million in stock-based compensation expense during the three months ended June

30, 2023 and 2022, respectively.

Research and Development

Research and development expenses for the three months ended March 31, 2023 were $5.6 million compared to $4.8 million for the three months ended March 31, 2022.

The following table illustrates the components of our research and development expenses for the periods presented (in thousands):

For the Three Months Ended

External costs:

Total external cost

Internal costs:

Employee related expenses

Facilities, supplies and other

Total internal costs

Total research and development expenses

Research and development expenses for the three months ended June 30, 2023 were $4.7 million compared to $3.2 million for the three months ended June 30, 2022.

The $1.6 million increase was

primarily attributable to increased manufacturing activities for Nyxol and APX3330 period over period as well as increased payroll and consulting costs during the current period.

Research and development expenses also included $0.3 million and

$0.1 million in stock-based compensation expense during the three months ended March 31, 2023 and 2022, respectively.

primarily attributable to increased clinical costs of $1.4 million for the Nyxol VEGA-2 trial offset by decreased clinical costs for prior Nyxol trials and the APX3330 ZETA-1 trial period over period as well as increased consulting and other

costs of $0.2 million on a net basis during the current three month period.

Pursuant to the Nyxol License Agreement, our budgeted research and development expenses related to the development of Nyxol are fully

reimbursed by Viatris.

Research and development expenses also included $0.3 million and $0.2 million in stock-based compensation expense during the three months ended June 30, 2023 and 2022, respectively.

Interest Expense

Interest expense for the three months ended March 31, 2022 of $5,000 was comprised of interest on principal related to a short-term loan (related to financing an insurance policy).

Interest expense for the three months ended June 30, 2022 of $4,000 was comprised of interest on principal related to a short-term loan (related to financing an insurance policy).

interest expense during the current three month period.

Ocuphire Pharma, Inc.

Fair Value Change in Warrant Liabilities

The fair value change in warrant liabilities was de minimis during the three months ended March 31, 2023 and 2022 associated with the Rexahn warrants.

Other Income, net

During the three months ended June 30, 2023, Ocuphire had other income, net of $0.4 million related primarily to interest income in connection with our cash and cash equivalents

During the three months ended June 30, 2022, Ocuphire had other income, net of $15,000 which consisted of interest income related to cash and cash equivalents of $22,000 and realized currency gains of

$2,000, offset in part by unrealized losses from our short-term investments of $9,000.

Comparison of Six Months Ended June 30, 2023 and 2022

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

For the Six Months Ended

License and collaborations revenue

Operating expenses:

General and administrative

Research and development

Total operating expenses

Loss from operations

Interest expense

Other income (expense), net

During the three months ended March 31, 2023, Ocuphire had other income (expense), net of $0.3 million related to interest income related to our cash and cash equivalents on-hand of

$367,000, offset in part by net unrealized losses from our short-term investments of $27,000.

During the three months ended March 31, 2022, Ocuphire had other income (expense), net of $(82,000) stemming principally from net unrealized losses from our short-term

investments of $84,000, offset in part by interest income related to cash and cash equivalents on-hand of $2,000.

Loss before income taxes

Provision for income taxes

License and Collaborations Revenue

License and collaborations revenue was $5.4 million for the six months ended June 30, 2023.

There was no license and collaboration revenue during the six months ended June 30, 2022.

during the six month period in 2023 was derived primarily from the reimbursement of research and development services under the Nyxol License Agreement.

General and Administrative

General and administrative expenses for the six months ended June 30, 2023 were $6.6 million compared to $3.5 million for the six months ended June 30, 2022.

The increase period over period of

$3.1 million was primarily attributable to severance costs associated with the departure of our former Chief Executive Officer of $1.2 million, stock-based compensation of $1.1 million, professional services of $0.2 million, legal support of $0.2

million, business development activities of $0.1 million and personnel related and other costs of $0.3 million on a net basis.

General and administrative expenses totaled $1,634,000 and $571,000 in stock-based compensation expense during the six

months ended June 30, 2023 and 2022, respectively.

Research and Development

The following table illustrates the components of our research and development expenses for the periods presented (in thousands):

For the Six Months Ended

External costs:

Total external cost

Internal costs:

Employee related expenses

Facilities, supplies and other

Total internal costs

Total research and development expenses

Ocuphire Pharma, Inc.

Research and development expenses for the six months ended June 30, 2023 were $10.3 million compared to $7.9 million for the six months ended June 30, 2022.

The $2.4 million increase was

primarily attributable to increased clinical costs of $1.2 million for the Nyxol VEGA-2 trial offset by decreased clinical costs for prior Nyxol trials and the APX3330 ZETA-1 trial and increased manufacturing activities of $0.4 million for

APX3330 period over period.

Additionally, higher payroll and consulting costs of $0.5 million and other operating expenses of $0.3 million, on net basis, contributed to the expense increase during the current six month period.

Pursuant to the Nyxol License Agreement, our budgeted research and development expenses related to the development of Nyxol are fully reimbursed by Viatris.

Research and development expenses also included $0.6

million and $0.3 million in stock-based compensation expense during the six months ended June 30, 2023 and 2022, respectively.

Interest Expense

Interest expense for the six months ended June 30, 2022 of $9,000 was comprised of interest on principal related to a short-term loan (related to financing an insurance policy).

interest expense during the current six month period.

Other Income (Expense), net

During the six months ended June 30, 2023, Ocuphire had other income (expense), net of $0.8 million related primarily to interest income in connection with our cash and cash

equivalents on-hand.

During the six months ended June 30, 2022, Ocuphire had other expense, net of $67,000 stemming principally from net unrealized losses from our short-term investments of $93,000, offset in part by interest income of

$24,000 related to cash and cash equivalents on hand and realized currency gains of $2,000.

Liquidity and Capital Resources

Capital Resources

As of March 31, 2023, our principal sources of liquidity consisted of cash and cash equivalents of $39.0 million.

As of June 30, 2023, our principal sources of liquidity consisted of cash and cash equivalents of $40.0 million.

We believe that our cash on hand will be sufficient to fund our

operations for at least twelve months beyond the date of this filing .

As of March 31, 2023, our cash and cash equivalents on-hand were held largely at one large financial institution.

As of June 30, 2023, our cash and cash equivalents on-hand were held at two large financial institutions.

Historical Capital Resources

Our primary source of cash to fund our operations has been various equity offerings in the amount of $54.1 million and the issuance of convertible notes in the amount of $8.5 million, inclusive

of the promissory notes exchanged for Ocuphire convertible notes.

In addition, during the fourth quarter of 2022, we received a one-time non-refundable cash payment of $35.0 million and recently received reimbursement for costs related to

development in connection with the Nyxol License Agreement.

of the promissory notes exchanged for Ocuphire convertible notes (the “Ocuphire Convertible Notes”).

In addition, during the fourth quarter of 2022, we received a one-time non-refundable cash payment of $35.0 million and recently received

reimbursement for costs related to development in connection with the Nyxol License Agreement.

At-The-Market Program

On February 4, 2021, we filed a Form S-3 shelf registration under the Securities Act which was declared effective by the SEC on February 12, 2021 (the “2021 Shelf”) under

which the Company may offer and sell, from time to time in our sole discretion, securities having an aggregate offering price of up to $125 million.

On February 4, 2021, we filed a Form S-3 shelf registration under the Securities Act which was declared effective by the SEC on February 12, 2021 (the “2021 Shelf”) under which

the Company may offer and sell, from time to time in our sole discretion, securities having an aggregate offering price of up to $125 million.

In connection with the 2021 Shelf, on March 11, 2021, we entered into a sales agreement with

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offering price of up to $40 million (the “ATM”).

A total of 4,627,870 shares of common stock were sold under the ATM for net proceeds through September 2022 in the amount of $17.3 million.

No shares of common stock were sold under the ATM

during the fourth quarter of 2022 or during the first quarter of 2023.

A total of 4,627,870 shares of common stock were sold under the ATM for net proceeds through June 30, 2023 in the amount of $17.3 million.

No shares of common stock were sold under the ATM during

the fourth quarter of 2022 or during the first two quarters of 2023.

Registered Direct Offering

On June 4, 2021, we entered into a placement agency agreement with A.G.P./Alliance Global Partners (“AGP”).

Pursuant to the terms of the placement agency agreement, AGP on

June 8, 2021, sold an aggregate of 3,076,923 shares of our common stock and warrants to purchase 1,538,461 shares of our common stock (the “RDO Warrants”) at an offering price of $4.875 per share and 0.50 RDO Warrants, for gross proceeds of

Pursuant to the terms of the placement agency agreement, AGP on June

8, 2021, sold an aggregate of 3,076,923 shares of our common stock and warrants to purchase 1,538,461 shares of our common stock (the “RDO Warrants”) at an offering price of $4.875 per share and 0.50 RDO Warrants, for gross proceeds of $15.0

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

The purchase agreement contains customary representations, warranties and agreements by the Ocuphire, customary conditions to closing,

indemnification obligations of Ocuphire, other obligations of the parties and termination provisions.

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

following the initial exercise date.

Subject to limited exceptions, a holder of a RDO Warrant will not have the right to exercise any portion of its RDO Warrants if the holder, together with its

affiliates, would beneficially own in excess of 4.99% (or, at the election of a holder prior to the date of issuance, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise;

however, that upon prior notice to us, the holder may increase or decrease the beneficial ownership limitation, provided further that in no event shall the beneficial ownership limitation exceed 9.99%.

As of March 31, 2023, 1,538,461

RDO Warrants were still outstanding.

The purchase agreement contains customary representations, warranties and agreements by Ocuphire, customary conditions to closing, indemnification

obligations of Ocuphire, other obligations of the parties and termination provisions.

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

the initial exercise date.

Subject to limited exceptions, a holder of a RDO Warrant will not have the right to exercise any portion of its RDO Warrants if the holder, together with its affiliates, would

beneficially own in excess of 4.99% (or, at the election of a holder prior to the date of issuance, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise;

provided, however, that upon

prior notice to us, the holder may increase or decrease the beneficial ownership limitation, provided further that in no event shall the beneficial ownership limitation exceed 9.99%.

As of June 30, 2023, 1,538,461 RDO Warrants were

still outstanding.

The offering of the securities was made pursuant to our effective shelf registration statement on Form S-3.

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

As of March 31, 2023, 5,665,838 Series A Warrants were still

As of June 30, 2023, 5,665,838 Series A Warrants were still

At issuance, the Series A Warrants contained certain provisions that could have resulted in a downward adjustment of the initial exercise price and an upward adjustment in the number of shares

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common stock in the aggregate (without giving effect to any limitation on exercise contained therein) and ultimately became exercisable for 1,708,335 shares of common stock upon execution of the Waiver Agreements.

As of March 31, 2023, none of

the Series B Warrants remained outstanding.

As of June 30, 2023, none of the

Series B Warrants remained outstanding.

At issuance, the Series B Warrants contained certain provisions that could have resulted in the issuance of additional Series B Warrants depending on the dollar volume-weighted average prices of a share of Common

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Ocuphire Convertible Notes

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

Ocuphire convertible notes.

From May 2018 through March 2020, we issued the Ocuphire Convertible Notes for aggregate gross proceeds of $8.5 million, inclusive of the promissory notes exchanged for Ocuphire Convertible

The final closing of the Ocuphire Convertible Notes occurred on March 10, 2020.

The Ocuphire Convertible Notes had an interest rate of 8% per annum.

On November 4, 2020, all of

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

On November 4, 2020, all of Ocuphire’s outstanding notes

were converted into 977,128 shares of Ocuphire common stock in connection with the completion of the Merger.

Ocuphire Pharma, Inc.

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

For the Three Months Ended

For the Six Months Ended

Net cash used in operating activities

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Cash Flow from Operating Activities

For the three months ended March 31, 2023, cash used in operating activities of $3.6 million was attributable to a net loss of $5.8 million, partially offset by $0.8 million in non-cash operating

For the six months ended June 30, 2023, cash used in operating activities of $2.7 million was attributable to a net loss of $10.8 million, partially offset by $2.2 million in non-cash operating

expenses and a net change cash source of $5.8 million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted principally of stock-based compensation of $2.2 million and unrealized loss on short-term investments of

The change in operating assets and liabilities was primarily attributable to an increase in Ocuphire’s accounts payable and accrued expenses, and by decreases in our contract asset and prepaid expenses, associated with Ocuphire’s

operating expenses under the normal course of business.

These net change sources of cash were offset in part by an increase in our accounts receivable during the period.

For the three months ended March 31, 2022, cash used in operating activities of $6.2 million was attributable to a net loss of $6.6 million, partially offset by $0.5 million in non-cash operating

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

The change in operating assets and liabilities was primarily attributable to an increase in Ocuphire’s accounts payable and accrued expenses, and by decreases in our accounts receivable, contract assets, unbilled receivables and prepaid

expenses, all associated with Ocuphire’s operating expenses under the normal course of business.

For the six months ended June 30, 2022, cash used in operating activities of $10.0 million was attributable to a net loss of $11.5 million, partially offset by $1.0 million in non-cash operating

expenses, and a net change of approximately $0.6 million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted principally of stock-based compensation of $0.9 million and unrealized loss on short-term investments of

The change in operating assets and liabilities was primarily attributable to a decrease in Ocuphire’s accounts payable and accrued expenses, offset in part by an decrease in prepaid expenses and other assets associated with the

fluctuations of Ocuphire’s operating expenses under the normal course of business.

$0.1 million.

The change in operating assets and liabilities was primarily attributable to a net cash source of $0.6 million attributed to a net decrease in our prepaid expenses associated with the fluctuations of Ocuphire’s operating expenses

and timing of payments.

Cash Flow from Investing Activities

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Cash Flow from Financing Activities

Net cash provided by financing activities during the three months ended March 31, 2022 was $0.9 million in connection with the 2021 ATM financing net proceeds of $1.2 million and exercise of

stock options in the amount of $27,000, offset by payments made on the short-term loan of $0.3 million.

There was no financing activities during the three months ended March 31, 2023.

Net cash provided by financing activities during the six months ended June 30, 2022 was $2.5 million that consisted principally of proceeds received from the 2021 ATM net of issuance costs in the

amount of $3.0 million, offset in part by payments made on the short-term loan of $0.5 million.

There were no sources or uses from financing activities during the six month period ending June 30, 2023.

Liquidity and Capital Resource Requirements

As of March 31, 2023, we had cash and cash equivalents of $39.0 million.

License and collaborations revenue inception to date was derived from

a one-time non-refundable payment of $35 million and reimbursement and expected reimbursement of expenses earned under the Nyxol License Agreement, and to a much lesser degree, from license agreements with BioSense Global LLC (“BioSense”) and

Processa Pharmaceuticals, Inc.

As of June 30, 2023, we had cash and cash equivalents of $40.0 million.

License and collaborations revenue inception to date was derived from a one-time non-refundable payment of $35 million and reimbursement and expected reimbursement of expenses earned under the Nyxol License Agreement, and to a much lesser degree, from license agreements with

BioSense Global LLC (“BioSense”) and Processa Pharmaceuticals, Inc.

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

We anticipate that we will recognize revenue as we earn reimbursement for research and development services in connection with the Nyxol License

Agreement and we may earn additional revenues from future potential milestone and royalty payments from the agreements with Viatris, BioSense, Processa, or from other license agreements entered into the future;

however, the attainment of

milestones or level of sales required to earn royalty payments is highly uncertain for the reasons explained below.

We anticipate that we will recognize revenue as we earn reimbursement for research and development services in

connection with the Nyxol License Agreement and we may earn additional revenues from future potential milestone and royalty payments from the agreements with Viatris, BioSense, Processa, or from other license agreements entered into the future;

however, the attainment of milestones or level of sales required to earn royalty payments is highly uncertain for the reasons explained below.

To date, outside of the license and collaborations revenue referenced above, we do not expect to generate significant revenue unless or until regulatory

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approval, our ability to generate significant revenue would be compromised.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the

terms of these securities may include liquidation, warrants, or other preferences that adversely affect your rights as a common stockholder.

Debt financing, if available, may involve agreements that include covenants limiting or restricting our

ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

In addition, on August

10, 2023, we entered into a common stock purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which provides that we have the sole right, but not the obligation, to direct Lincoln Park to

purchase up to $50 million of shares of our common stock, from time to time over the 30-month term of the Purchase Agreement.

Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement with

Lincoln Park (the “Registration Rights Agreement”), pursuant to which we agreed to register the resale of the shares of our common stock that have been and may be issued to Lincoln Park under the Purchase Agreement pursuant to a registration

We intend to file a prospectus supplement to our Registration Statement (File No.

333-252715) on August 11, 2023 with the Commission.

Per the terms of the Purchase Agreement, we will be unable to sell shares of our common stock to

Lincoln Park if the sale price falls below $0.25 per share.

Therefore, there is no assurance that we will have full access to the facility during the term of the Purchase Agreement.

Ocuphire Pharma, Inc.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms

of these securities may include liquidation, warrants, or other preferences that adversely affect your rights as a common stockholder.

Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability

to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise additional funds through future collaborations, strategic alliances or licensing arrangements with pharmaceutical

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candidates that we would otherwise prefer to develop and market ourselves.

Ocuphire Pharma, Inc.

Future Capital Requirements

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

than what we currently anticipate and could result in cash resources being used sooner than what we currently expect.

Additionally, the process of advancing early-stage product candidates and testing product candidates in clinical trials is

costly, and the timing of progress in these clinical trials is uncertain.

Our ability to successfully transition to profitability will be dependent upon achieving a level of product sales adequate to support our cost structure.

We cannot give

any assurance that we will ever be profitable or generate positive cash flow from operating activities.

Pursuant to the Nyxol License Agreement, our budgeted research and development expenses related to the development of Nyxol are fully reimbursed by Viatris.

The development of APX3330 is subject to numerous uncertainties, and we have based these estimates on assumptions that may prove to be substantially different than what we currently anticipate and could result in cash resources being used

sooner than what we currently expect.

Additionally, the process of advancing early-stage product candidates and testing product candidates in clinical trials is costly, and the timing of progress in these clinical trials is uncertain.

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

We cannot give any assurance that we will ever be profitable or generate positive cash flow

from operating activities.

Contractual Obligations and Commitments

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Apexian Sublicense Agreement

On January 21, 2020, we entered into the Apexian Sublicense Agreement, pursuant to which we obtained exclusive worldwide patent and other intellectual

property rights that constitute a Ref-1 Inhibitor program relating to therapeutic applications to treat disorders related to ophthalmic and diabetes mellitus conditions.

The lead compound in the Ref-1 Inhibitor program is APX3330, which we

intend to develop as an oral tablet therapeutic to treat DR and DME, and potentially wAMD.

On January 21, 2020, we entered into the Apexian Sublicense Agreement, pursuant to which we obtained exclusive worldwide

patent and other intellectual property rights that constitute a Ref-1 Inhibitor program relating to therapeutic applications to treat disorders related to ophthalmic and diabetes mellitus conditions.

The lead compound in the Ref-1 Inhibitor

program is APX3330, which we intend to develop as an oral tablet therapeutic to treat NPDR.

The unique, dual mechanism of action of Ref-1 inhibitors (e.g., APX3330, APX2009 and APX2014) of reducing angiogenesis and inflammation could

potentially be beneficial in treating other retinal diseases such as AMD, and GA.

Ocuphire is currently evaluating local delivery routes in addition to the systemic (oral) route as part of its pipeline expansion into retina.

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

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Sublicense Agreement.

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

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

Other Commitments

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Other Funding Requirements

As noted above, certain of our cash requirements relate to the funding of our ongoing research and development of APX3330, inclusive of any potential milestone

and royalty obligations under our intellectual property licenses.

See “Part I, Item 1— Business—APX3330 Clinical Experience Summary —Ocuphire Clinical Development Plan —Potential Clinical Plans for APX3330—Future In-Licensing and Acquisition

Opportunities—Manufacturing—Apexian Sublicense Agreement— Review and Approval of Drugs in the United States” in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of design, development, pre-clinical and

clinical activities that we may conduct in the future, including expected cash expenditures required for some of those activities, to the extent we are able to estimate such costs.

As noted above, certain of our cash requirements relate to the funding of our ongoing research and

development of APX3330, inclusive of any potential milestone and royalty obligations under our intellectual property licenses.

See “Part I, Item 1— Business—APX3330 Clinical Experience Summary —Ocuphire Clinical Development Plan —Potential

Clinical Plans for APX3330—Future In-Licensing and Acquisition Opportunities—Manufacturing—Apexian Sublicense Agreement— Review and Approval of Drugs in the United States” in our Annual Report on Form 10-K for the year ended December 31,

2022 for a discussion of design, development, pre-clinical and clinical activities that we may conduct in the future, including expected cash expenditures required for some of those activities, to the extent we are able to estimate such costs.

Ocuphire Pharma, Inc.

Our other cash requirements within the next twelve months include accounts payable, accrued expenses, purchase commitments and other current liabilities.

Our other cash requirements

greater than twelve months from various contractual obligations and commitments may include operating leases and contractual agreements with third-party service providers for clinical research, product development, manufacturing,

commercialization, supplies, payroll, equipment maintenance, and audits for periods into calendar year 2024.

cash requirements greater than twelve months from various contractual obligations and commitments may include operating leases and contractual agreements with third-party service providers for clinical research, product development,

manufacturing, commercialization, supplies, payroll, equipment maintenance, and audits for periods into calendar year 2024.

Refer to Note 3 – Commitments and Contingencies included in “ Part 1, Item 1 – Financial Statements ” of this Report for further detail of our lease obligation and license agreements with regard to the timing of expected future payments.

We expect to satisfy our short-term and long-term obligations through cash on hand, from future equity and debt financings, and from reimbursement payments, potential milestone and royalty payments under the

Nyxol License Agreement and any future collaborations and license agreements, until we generate an adequate level of revenue from commercial sales to cover expenses, if ever.

We expect to satisfy our short-term and long-term obligations through cash on hand, from future equity and debt financings, and from reimbursement payments, potential

milestone and royalty payments under the Nyxol License Agreement and any future collaborations and license agreements, until we generate an adequate level of revenue from commercial sales to cover expenses, if ever.

Critical Accounting Policies and Estimates

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accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.

Ocuphire Pharma, Inc.

Our significant accounting policies are discussed in Note 1 — Company Description and Summary of Significant Accounting Policies, included in “Part I, Item 1 –

Financial Statements and Supplementary Data” of this Report.

We believe that the following accounting policies and estimates are the most critical to aid in fully understanding and evaluating our

reported financial results.

These estimates require our most difficult, subjective, or complex judgments because they relate to matters that are inherently uncertain.

We have reviewed these critical accounting policies and estimates and related

disclosures with the Audit Committee of our Board of Directors.

We have not made any material changes to date, nor do we believe there is a reasonable likelihood of a material future change to the accounting methodologies for the areas

described below.

Financial Statements” of this Report.

We believe that the following accounting policies and estimates are the most critical to aid in fully understanding and evaluating our reported financial results.

These estimates require our most difficult,

subjective, or complex judgments because they relate to matters that are inherently uncertain.

We have reviewed these critical accounting policies and estimates and related disclosures with the Audit Committee of our Board of Directors.

not made any material changes to date, nor do we believe there is a reasonable likelihood of a material future change to the accounting methodologies for the areas described below.

License and Collaborations Revenue

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Financial Statements” of this Report.

Warrant Liabilities

Following the Merger, Ocuphire assumed Rexahn warrants issued prior to the Merger.

Ocuphire accounts for these warrants as a liability at fair value as long as certain provisions

precluding equity accounting treatment are present.

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.

Stock-based Compensation

Ocuphire accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation — Stock

Compensation .

Ocuphire accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation

— Stock Compensation .

Accordingly, compensation costs related to equity instruments granted are recognized at the grant date fair value which is not subject to remeasurement.

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Income Tax Assets and Liabilities

A full valuation allowance has been provided on our net deferred tax assets given the uncertainty of future taxable income and other related factors impacting

the realizability of our remaining net deferred tax assets.

For additional information, see Note 12 — Income Taxes included in “Part II, Item 8 – Financial Statements and Supplementary Data” in our Annual Report filed on Form 10-K for the

year ended December 31, 2022, and see Note 11 — Income Taxes included in “ Part 1, Item 1 – Financial Statements ” of this Report.

A full valuation allowance has been provided on our net deferred tax assets given the uncertainty of future taxable income and other related factors impacting the

realizability of our remaining net deferred tax assets.

For additional information, see Note 12 — Income Taxes included in “Part II, Item 8 – Consolidated Financial Statements and Supplementary Data” in our Annual Report filed on Form 10-K

for the year ended December 31, 2022, and see Note 11 — Income Taxes included in “ Part 1, Item 1 – Financial Statements ” of this Report.

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 1, Item 1 – Financial Statements ” of this Report.

For additional

information, see Note 3 — Commitments and Contingencies included in “ Part 1, Item 1 – Financial Statements ” of this Report.

Ocuphire Pharma, Inc.

Recent Accounting Pronouncements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis