What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-10 · 267 added, 203 removed, 300 unchanged (61% of the section changed)

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Forward-Looking Statements

Certain statements contained in this Report are not statements of historical fact and are forward-looking statements within the meaning of Section

27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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

operating performance.

Such statements include, but are not limited to, statements concerning the applications of Phentolamine Ophthalmic Solution 0.75%, formerly known as Nyxol (“PS”) in ophthalmology, the registration program for PS,

the LYNX-2 Phase 3 registration study, the benefits, uses and side effects of PS treatment, ongoing discussions with the U.S.

Federal Drug Administration (the “FDA”) regarding various of our drug products, and continued drug development under our

agreement with Viatris.

Certain statements contained in this Report are

not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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

Such statements include, but are not limited to, statements concerning the applications of Phentolamine

Ophthalmic Solution 0.75%, formerly known as Nyxol (“PS”) in ophthalmology, the registration program for and commercialization of PS, the LYNX-2 Phase 3 registration study, the LYNX-3 Phase 3 registration study, the contemplated Phase 2/3

registration study for APX3330, the upcoming VEGA-3 Phase 3 clinical trial, the benefits, uses and side effects of PS treatment, ongoing discussions with the U.S.

Federal Drug Administration (the “FDA”) regarding various of our drug products, and

continued drug development under our agreement with Viatris.

In some cases, you can identify forward-looking statements by the following words:

“anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “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.

“anticipate,” “believe,”

“could,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or

outcomes to identify these forward-looking statements.

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

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Obtaining and maintaining Ocuphire’s intellectual property rights.

Ocuphire Pharma, Inc.

We discuss many of these risks in greater detail under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent reports

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forward-looking 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 biopharmaceutical company focused on developing novel therapies for the treatment of unmet needs of patients with retinal and refractive eye disorders with

one FDA-approved product currently marketed by Viatris, Inc.

Ocuphire Pharma, Inc.

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

Ref-1 is a regulator of transcription factors

such as HIF-1α and NF-kB.

Inhibiting Ref-1 has been shown to reduce levels of vascular endothelial growth factor (“VEGF”) and inflammatory cytokines which are known to play key roles in ocular angiogenesis and inflammation.

APX3330 is an oral

tablet administered twice per day in development for the treatment of diabetic retinopathy (“DR”).

We are a clinical-stage biopharmaceutical company with one FDA-approved product currently marketed by Viatris, Inc., our

development and commercial partner.

We are 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 small-molecule

inhibitor of Ref-1 (reduction oxidation effector factor-1 protein).

Ref-1 is a regulator of transcription factors such as HIF-1α and NF-kB.

Inhibiting Ref-1 has been shown to reduce levels of vascular endothelial growth factor

(“VEGF”) and inflammatory cytokines which are known to play key roles in ocular angiogenesis and inflammation.

APX3330 is an oral tablet intended to be administered twice per day in development for the treatment of diabetic retinopathy (“DR”).

DR affects approximately 10 million diabetics and is projected to impact over 14 million Americans by 2050.

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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 and severe NPDR and mild PDR, as well as patients with diabetic macular edema without loss of central vision.

Although administration of APX3330 daily did not meet the study’s primary endpoint of percentage 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, efficacy was seen on the ≥3-step worsening on a binocular DRSS

Person Scale.

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 and severe NPDR and mild PDR, as well as patients with diabetic macular edema without loss of central vision.

Although administration of APX3330 daily did not meet the

study’s primary endpoint of percentage 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, efficacy was

seen on the ≥3-step worsening on a binocular DRSS Person Scale.

Prevention or slowing of progression of DR to vision-threatening complication such as PDR is a clinically meaningful endpoint.

APX3330 also demonstrated favorable safety and tolerability in diabetic patients.

An End-of-Phase 2

(“EOP2”) meeting with the U.S.

Food and Drug Administration (the “FDA”) was held in October 2023 at which we obtained agreement on the registration endpoint of ≥3-step worsening on a binocular DRSS Person Scale.

APX3330 demonstrated favorable

safety and tolerability in the ZETA-1 trial.

Ocuphire submitted a Special Protocol Assessment (“SPA”) to the FDA in February 2024 to seek agreement on the clinical trial protocol and statistical analysis plan and will share specifics on the study

design parameters and anticipated timing if and when a SPA agreement is reached with the FDA.

APX3330 also demonstrated favorable safety and

tolerability in diabetic patients.

An End-of-Phase 2 (“EOP2”) meeting with the U.S.

Food and Drug Administration (the “FDA”) was held in October 2023 at which we obtained agreement on the registration endpoint of ≥3-step worsening on a binocular

DRSS Person Scale.

APX3330 demonstrated favorable safety and tolerability in the ZETA-1 trial.

Ocuphire submitted a Special Protocol Assessment (“SPA”) to the FDA in February 2024 to seek agreement on the clinical trial protocol and statistical

analysis plan.

The company continues dialog with the FDA and will update the market upon conclusion of these discussions.

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

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and inflammation could potentially be beneficial in treating other retinal diseases such as age-related macular degeneration, geographic atrophy, and non-ophthalmic diseases.

We are currently evaluating local delivery routes of APX3330 and its second-generation analogs (APX2009 and APX2014) in addition to the systemic (oral) route as part of its pipeline

expansion in retinal therapies.

Ocuphire Pharma, Inc.

RYZUMVI and Phentolamine Ophthalmic Solution 0.75% (PS)

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

(“Viatris”), as successor to FamyGen Life Sciences,

Inc., pursuant to which we granted Viatris an exclusive license to develop, manufacture, import, export and commercialize (i) our refractive product candidate Phentolamine Ophthalmic Solution 0.75%, formerly known as Nyxol (“PS”), for treating (a)

reversal of pharmacologically-induced mydriasis, (b) decreased vision under mesopic (low) light conditions after keratorefractive surgery, and (c) presbyopia;

and (ii) PS and low dose pilocarpine for treating presbyopia (together, the “PS

Products”) worldwide except for certain countries and jurisdictions in Asia (the “Viatris Territory”).

PS was approved by the FDA for the treatment for pharmacologically-induced mydriasis under the brand name RYZUMVI in September 2023, which

triggered a $10 million milestone payment under the Viatris License Agreement.

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

Sciences, Inc.

(acquired by and now known as Viatris, Inc.

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

Ophthalmic Solution 0.75%, formerly known as Nyxol (“PS”), for treating (a) reversal of pharmacologically-induced mydriasis, (b) decreased vision under mesopic (low) light conditions after keratorefractive surgery, and (c) presbyopia;

(ii) PS and low dose pilocarpine for treating presbyopia (together, the “PS Products”) worldwide except for certain countries and jurisdictions in Asia (the “Viatris Territory”).

PS was approved by the FDA for the treatment for

pharmacologically-induced mydriasis under the brand name RYZUMVI in September 2023, which triggered a $10 million milestone payment under the Viatris License Agreement.

RYZUMVI was commercialized by Viatris in April 2024.

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

Viatris will reimburse us for budgeted

costs related to the development of the PS Products through FDA approval.

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

evaluated in the comprehensive MIRA clinical trial program involving more than 600 subjects.

The percentage of subjects with study eyes returning to ≤0.2 mm from baseline pupil diameter was statistically significantly greater (p<0.01) at

all time points measured from 60 minutes through 24 hours in the Ryzumvi group compared with the placebo group across both of the MIRA-2 and MIRA-3 trials.

The safety and efficacy of Ryzumvi have been established in pediatric patients aged 3

to 17 years as well as in adults, and no overall differences have been observed between pediatric and adult subjects.

Under the terms of the Viatris License Agreement, Ocuphire, in partnership with Viatris, is developing the PS Products in the United States.

Viatris is required to reimburse us for

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

Viatris is responsible for developing the PS Products in countries and jurisdictions in the Viatris Territory outside of the United States.

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

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demonstrated promising clinical data across the three targeted refractive indications.

We reported positive top-line data from multiple late-stage clinical trials for PS in reversal of pharmacologically induced mydriasis, presbyopia and dim light disturbances.

VEGA-2 Phase 3 study in presbyopia achieved its primary endpoint and Viatris, our development and commercial partner, is expected to continue Phase 3 development in the first half of 2024.

For decreased vision under mesopic (low) light conditions

following keratorefractive surgery, we received FDA agreement under Special Protocol Assessment for LYNX-2, a Phase 3 Trial of PS.

We reported positive top-line data from multiple late-stage clinical trials for PS in reversal of pharmacologically induced mydriasis, presbyopia and

dim light disturbances.

The VEGA-2 Phase 3 study in presbyopia achieved its primary endpoint.

The VEGA-3 Phase 3 clinical trial evaluating PS for presbyopia (age-related blurry near vision) has begun recruiting.

For decreased vision under mesopic

(low) light conditions following keratorefractive surgery, we received FDA agreement under Special Protocol Assessment for LYNX-2, a Phase 3 Trial of PS.

The first patient was enrolled in LYNX-2 in April 2024.

Ocuphire Pharma, Inc.

The Company is also planning an additional Phase 3 study for decreased vision under mesopic (low) light conditions following keratorefractive surgery, LYNX-3, in Q4 2024.

Strategic Outlook

We intend to continue to explore opportunities to acquire additional 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, performing business and

financial planning, recruiting personnel and raising capital.

We have only one product, RYZUMVI, approved for sale with commercialization launched in April 2024, that has started to generate royalties based on sales by Viatris.

However, we do not

expect to consistently generate significant revenues, other than license and collaborations revenue, unless and until the FDA or other regulatory authorities approve, and we successfully commercialize, APX3330 or PS for other indications.

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, 2024, we have funded our operations primarily through equity financings that totaled $65.8 million in gross proceeds, of which $21.15 million was received in

We intend to continue to explore opportunities to acquire additional assets and expand the current pipeline to other retinal

indications with APX3330, APX2009 and APX2014.

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

We have only one

product, RYZUMVI, approved for sale that is generating royalties based on sales by Viatris, and we do not expect to consistently generate significant revenues, other than license and collaborations revenue, unless and until the FDA or other

regulatory authorities approve, and we successfully commercialize, APX3330 or PS for other indications.

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, 2024, we have funded our operations primarily through equity financings that totaled $67.3 million in gross proceeds, of which $21.15 million was received in

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

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and milestone payments of $45.0 million in the aggregate and reimbursement for costs related to development, all in connection with the Viatris License Agreement.

Our net loss was $7.1 million for the three months ended March 31, 2024 as compared to a net loss of $5.8 million for the three months ended March 31, 2023.

As of March 31, 2024, we

had an accumulated deficit of $88.6 million.

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

Our net loss was $7.8 million and $14.9 million for the three and six months ended June 30, 2024, respectively, as compared to a

net loss of $5.0 million and $10.8 million for the three and six months June 30, 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $96.3 million.

We anticipate that our expenses will continue to increase as we:

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

Ocuphire Pharma, Inc.

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

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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 loss will likely continue to fluctuate significantly from quarter to quarter and year to year, depending on the timing of our nonclinical studies, clinical trials,

Our net loss will likely continue to fluctuate significantly from quarter to quarter and year to year, depending on the timing of our nonclinical studies, clinical trials and

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

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License and Collaborations Revenue

License and collaborations revenue to date was derived from a one-time non-refundable payment related to a license transfer, an additional milestone payment and reimbursement of

expenses earned under the Viatris 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.

anticipate that we will recognize revenue as we earn reimbursement for research and development services in connection with the Viatris License Agreement and we may earn additional revenues from potential milestone and royalty payments from the

agreements with Viatris , BioSense, Processa, or from other license agreements entered into the future;

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

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

RYZUMVI, or regulatory approval is obtained, and commercialization begins for APX3330 or PS for indications other than RM.

If we fail to complete the development of APX3330, PS, 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.

License and collaborations revenue to date was derived from a one-time non-refundable payment related to a license transfer, an

additional milestone payment and reimbursement of expenses earned under the Viatris 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 Viatris License Agreement and we may earn additional revenues

from potential milestone and royalty payments from the agreements with Viatris , BioSense, or Processa, or from other license agreements entered into the future;

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 RYZUMVI sales become material, or regulatory approval is obtained, and commercialization begins for APX3330 or PS for indications other than RM.

If we fail to complete the development of APX3330, PS, 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 and research and development.

Ocuphire Pharma, Inc.

General and Administrative Expenses

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Research and development activities are central to our business model.

We expect that APX3330 and PS 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 and associated nonclinical studies.

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 nonclinical programs and clinical trials of APX3330, PS, and other product candidates.

We expect that APX3330 and PS 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 and associated nonclinical studies.

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 nonclinical programs and clinical trials of APX3330, PS and other product candidates.

Fair value change in derivative liabilities

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Currently, a full valuation allowance has been provided on the net

deferred tax assets as of March 31, 2024 and December 31, 2023 and given the uncertainty of future taxable income and other related factors impacting the realizability or our remaining net deferred tax assets.

deferred tax assets as of June 30, 2024 and December 31, 2023 given the uncertainty of future taxable income and other related factors impacting the realizability or our remaining net deferred tax assets.

Ocuphire Pharma, Inc.

Results of Operations

Comparison of Three Months Ended March 31, 2024 and 2023

Comparison of Three Months Ended June 30, 2024 and 2023

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

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Loss from operations

Fair value change in derivative liabilities

Other income, net

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License and Collaborations Revenue

License and collaborations revenue was $1.7 million for each of the three months ended March 31, 2024 and 2023.

Revenue during both quarterly periods was derived from the Viatris License

Agreement largely from the reimbursement of research and development services.

During the first quarter of 2024, we earned our first royalty payment in the amount of $3,000 stemming from the sale of RYZUMVI by

Viatris in late March 2024.

License and collaborations revenue was $1.1 million and $3.7 million for the three months ended June 30, 2024 and 2023,

respectively.

Revenue during both quarterly periods was derived from the Viatris License Agreement, largely for the reimbursement of research and development services.

Revenue for the three months ended June 30, 2024 includes an earned royalty

payment from the sales of RYZUMVI, indicated for the treatment of pharmacologically-induced mydriasis produced by adrenergic agonists (e.g., phenylephrine) or parasympatholytic (e.g., tropicamide) agents by our commercial partner.

The decrease in license and collaborations revenue during the current three month period ended June 30, 2024 compared to the corresponding prior year period was due to a reduction in PS research and development

General and Administrative

General and administrative expenses for the three months ended March 31, 2024 were $4.7 million compared to $2.3 million for the three months ended March 31, 2023.

The increase period over period

of $2.4 million was primarily attributable to an increase in payroll related costs of $0.6 million, stock-based compensation of $0.3 million, professional services of $0.1 million, corporate legal support of $0.6 million, legal fees associated with

intellectual property of $0.5 million, business development activities of $0.2 million and general operating costs of $0.1 million on a net basis.

General and administrative expenses included $0.8 million and $0.5 million in stock-based

compensation expense during the three months ended March 31, 2024 and 2023, respectively.

General and administrative expenses for the three months ended June 30, 2024 were $3.4 million compared to $4.3 million for the three months ended June 30, 2023.

The decrease of

$1.0 million was primarily attributable to a net reduction in payroll related costs of $1.2 million stemming largely from severance costs attributed to the departure of Mina Sooch, our former Chief Executive Officer, in the prior year and from a

reduction in other operating expenses of $0.3 million on a net basis.

Partially offsetting the reduction in expense during the three month period ended June 30, 2024 were increases in business development costs of $0.2 million, legal support costs

of $0.2 million and other operating expenses of $0.1 million when compared to the corresponding prior year period.

General and administrative expenses included $0.5 million and $1.2 million in stock-based compensation expense during the three

months ended June 30, 2024 and 2023, respectively.

Research and Development

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Total research and development expenses

Research and development expenses for the three months ended March 31, 2024 were $4.7 million compared to $5.6 million for the three months ended March 31, 2023.

The $0.8 million decrease was

primarily attributable to lower clinical costs of $1.5 million, lower regulatory costs of $0.1 million and lower manufacturing expenses of $0.3 million

attributed to an activity reduction in the PS VEGA-2 trial.

The lower research and development costs in the current quarter when compared to the comparable prior year quarter were offset in part by an increase in toxicology costs of $0.9 million,

higher payroll costs of $0.1 million, when factoring in stock-based compensation, and by an increase in general consulting costs of $0.1 million.

Ocuphire Pharma, Inc.

Research and development expenses for the three months ended June 30, 2024 were $6.1 million compared to $4.7 million for the three months ended June 30, 2023.

The $1.4 million

increase was primarily attributable to increased costs related to manufacturing costs of $2.0 million and toxicology costs of $0.4 million for APX3330, payroll related costs of $0.3 million and other operating costs of $0.2 million on net basis,

offset in part by decreased clinical costs of $1.5 million attributed to the PS Vega-2 trial when compared to the corresponding prior year period.

Pursuant to the Viatris License Agreement, our budgeted research and development expenses related to

the development of the PS Products have been fully reimbursed by Viatris to date.

Research and development expenses included $0.2 million and $0.3 million in stock-based compensation expense during the three months ended March 31, 2024 and 2023,

respectively.

the development of PS are fully reimbursed by Viatris.

Research and development expenses also included $0.3 million in stock-based compensation expense during each of the three months ended June 30, 2024 and 2023.

Other Income, net

During the three months ended June 30, 2024, Ocuphire had other income, net of $0.6 million related primarily to interest income in connection with our cash and cash equivalents

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

Comparison of Six Months Ended June 30, 2024 and 2023

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

Other income, net

Loss before income taxes

Provision for income taxes

License and Collaborations Revenue

License and collaborations revenue was $2.8 and $5.4 million for the six months ended June 30, 2024 and 2023, respectively.

Revenue during the six month periods was derived

primarily from the reimbursement of research and development services under the Viatris License Agreement.

The decrease in license and collaborations revenue during the current six month period ended June 30, 2024 when compared to the corresponding

prior year period was due to a reduction in PS research and development services.

Ocuphire Pharma, Inc.

Fair value change in derivative liabilities

The fair value change in derivative liabilities attributed to the equity line financing, as described further below, was negligible for the three months ended March 31, 2024.

This is attributed to the fluctuations in our common stock fair value and the number of potential shares of common stock issuable at the various discount tiers under the equity line financing.

The equity line financing was not in effect during the

three months ended March 31, 2023.

Lastly, the fair value change of the warrant liabilities associated with the Rexahn warrants was also included in this line item for the three months ended March 31, 2023, but was de minimis .

The last of the Rexahn warrants classified as liabilities expired in April 2023 unexercised.

General and Administrative

General and administrative expenses for the six months ended June 30, 2024 were $8.0 million compared to $6.6 million for the six months ended June 30, 2023.

The increase of $1.4

million was primarily attributable to professional service costs of $0.2 million, legal support costs of $0.7 million, patent fees of $0.6 million and business development activity costs of $0.4 million;

the cost increases were partially offset by

reductions in payroll related costs of $0.3 million and other general operating expenses of $0.2 million on net basis when compared to the corresponding prior year period.

General and administrative expenses totaled $1.3 million and $1.6 million in

stock-based compensation expense during the six months ended June 30, 2024 and 2023, 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:

Phentolamine Ophthalmic Solution 0.75% (“PS”)

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 six months ended June 30, 2024 were $10.8 million compared to $10.3 million for the six months ended June 30, 2023.

The $0.5 million

increase was primarily attributable to increased manufacturing costs of $1.7 million and toxicology costs of $1.3 million for APX3330, payroll related costs of $0.4 million and other professional service costs of $0.2 million, partially offset by

decreased clinical costs of $2.9 million primarily attributed to the PS Vega-2 trial when compared to the corresponding prior year period and decreased other operating expenses of $0.2 million.

Pursuant to the Viatris License Agreement, our

budgeted research and development expenses related to the development of PS are fully reimbursed by Viatris.

Research and development expenses also included $0.5 million and $0.6 million in stock-based compensation expense during the six months

ended June 30, 2024 and 2023, respectively.

Other Income, net

During the three months ended March 31, 2024, Ocuphire had other income, net of $0.6 million related to interest income related to our cash and cash equivalents

on-hand of $0.6 million.

During the three months ended March 31, 2023, Ocuphire had other income, 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 six months ended June 30, 2024, Ocuphire had other income, net of $1.2 million related primarily to interest income in connection with our cash and cash equivalents

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

Liquidity and Capital Resources

Capital Resources

As of March 31, 2024, our principal sources of liquidity consisted of cash and cash equivalents of $47.2 million.

We believe that our cash on hand as of March 31, 2024 will be

As of June 30, 2024, our principal sources of liquidity consisted of cash and cash equivalents of $41.4 million.

We believe that our cash on hand as of June 30, 2024 will be

sufficient to fund our operations for at least twelve months beyond the date of this filing.

As of March 31, 2024, our cash and cash equivalents were invested primarily in cash deposits and cash equivalent investments at two large financial

As of June 30, 2024, our cash and cash equivalents were invested primarily in cash deposits and cash equivalent investments at two large financial

institutions.

Ocuphire Pharma, Inc.

Historical Capital Resources

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

addition to the commitment shares referenced above, a total of 1,450,000 shares of common stock were sold under the Purchase Agreement for gross proceeds through March 31, 2024 in the amount of $4.8 million.

No shares of common stock were sold

under the Purchase Agreement prior to the third quarter of 2023.

addition to the commitment shares referenced above, a total of 1,700,000 shares of common stock were sold under the Purchase Agreement for gross proceeds through June 30, 2024 in the amount of $5.2 million.

No shares of common stock were sold under

the Purchase Agreement prior to the third quarter of 2023.

At-The-Market Program

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A total of 7,434,432 shares

of common stock were sold under the ATM since its inception for gross proceeds through March 31, 2024 in the amount of $24.8 million.

of common stock were sold under the ATM since its inception for gross proceeds through June 30, 2024 in the amount of $26.0 million.

Registered Direct Offering

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

Ocuphire Pharma, Inc.

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

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ownership limitation, provided further that in no event shall the beneficial ownership limitation exceed 9.99%.

As of March 31, 2024, 1,538,461 RDO Warrants were still outstanding.

As of June 30, 2024, 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.

Ocuphire Pharma, Inc.

Pre-Merger Financing

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closing of the Merger (the “Pre-Merger Financing”).

Pursuant to the Pre-Merger Financing, (i) Ocuphire issued and sold to the investors shares of common stock of Ocuphire (the “Initial Shares”), which converted pursuant to the exchange ratio in the

Merger into an aggregate of 1,249,996 shares (the “Converted Initial Shares”) of common stock, (ii) Ocuphire deposited into escrow, for the benefit of the investors, additional shares of common stock of Ocuphire (the “Additional Shares”), which

converted pursuant to the exchange ratio in the Merger into an aggregate of 3,749,992 shares of common stock (the “Converted Additional Shares”), which Converted Additional Shares were delivered (or became deliverable) to the investors on November

19, 2020, and (iii) we agreed to issue to each investor on the tenth trading day following the consummation of the Merger (x) Series A Warrants representing the right to acquire shares of common stock equal to the sum of (A) the Converted Initial

Shares purchased by the investor, (B) the Converted Additional Shares delivered or deliverable to the investor, without giving effect to any limitation on delivery contained in the Securities Purchase Agreement and (C) the initial number of shares

of common stock, if any, underlying the Series B Warrants issued to the investor and (y) additional warrants to purchase shares of common stock.

Pursuant to the Pre-Merger Financing, (i) Ocuphire issued and sold to the investors shares of common stock (the “Initial Shares”), which converted pursuant to the exchange ratio in the Merger into

an aggregate of 1,249,996 shares (the “Converted Initial Shares”) of common stock, (ii) Ocuphire deposited into escrow, for the benefit of the investors, additional shares of common stock (the “Additional Shares”), which converted pursuant to the

exchange ratio in the Merger into an aggregate of 3,749,992 shares of common stock (the “Converted Additional Shares”), which Converted Additional Shares were delivered (or became deliverable) to the investors on November 19, 2020, and (iii) we

agreed to issue to each investor on the tenth trading day following the consummation of the Merger (x) Series A Warrants representing the right to acquire shares of common stock equal to the sum of (A) the Converted Initial Shares purchased by the

investor, (B) the Converted Additional Shares delivered or deliverable to the investor, without giving effect to any limitation on delivery contained in the Securities Purchase Agreement and (C) the initial number of shares of common stock, if any,

underlying the Series B Warrants issued to the investor and (y) additional warrants to purchase shares of common stock.

Waiver Agreements

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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, 2024, 5,665,838 Series A Warrants were

As of June 30, 2024, 5,665,838 Series A Warrants were

still outstanding.

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Agreements, these provisions are no longer in effect.

Ocuphire Pharma, Inc.

Series B Warrants

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

defined therein) or (ii) the date on which the investor’s Series B Warrants would have been exercised in full (without giving effect to any limitation on exercise contained therein).

The Series B Warrants were initially exercisable for 665,836

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

As of March 31, 2024,

The Series B Warrants had an exercise price of $0.0001 and ultimately became exercisable for 1,708,335 shares of common stock upon execution of the Waiver Agreements.

As of June 30,

2024, none of the Series B Warrants remained outstanding.

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

average prices of a share of Common Stock during a 45-trading day reset period.

Pursuant to the terms of the Waiver Agreements, those provisions were no longer in effect.

Ocuphire Pharma, Inc.

Ocuphire Convertible Notes

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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, 2024, cash used in operating activities of $5.7 million was attributable to a net loss of $7.1 million, partially offset by $1.0 million in non-cash operating

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

The non-cash expenses consisted principally of stock-based compensation of $1.0 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 accrued expenses and prepaid expenses, offset in part by an increase in our accounts receivable, attributed to fluctuations in

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

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

expenses and a net change cash source of $1.3 million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted principally of stock-based compensation of $0.8 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 six months ended June 30, 2024, cash used in operating activities of $13.0 million was attributable to a net loss of $14.9 million, partially offset by $1.8 million in

non-cash operating expenses and a net change cash source of $0.1 million in Ocuphire’s net operating assets and liabilities.

The non-cash expenses consisted principally of stock-based compensation of $1.8 million and unrealized loss on short-term

investments of $10,000.

The change in operating assets and liabilities was primarily attributable to a slight increase in Ocuphire’s net current liabilities, all associated with Ocuphire’s operations.

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

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

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

investments of $27,000.

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

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

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, 2024 was $2.4 million that consisted principally of proceeds received from the ATM and Purchase

Agreement, net of issuance costs, in the amount of $0.2 million.

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

Net cash provided by financing activities during the six months ended June 30, 2024 was $3.9 million that consisted principally of proceeds received from the 2021 ATM and Purchase

Agreement, net of issuance costs, in the amount of $4.0 million, slightly offset by share repurchases for the payment of employee taxes.

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

Ocuphire Pharma, Inc.

Liquidity and Capital Resource Requirements

As of March 31, 2024, we had cash and cash equivalents of $47.2 million.

License and collaborations revenue inception to date was derived from a one-time non-refundable payment of

$35 million, a milestone payment of $10 million, reimbursement and expected reimbursement of expenses and royalties earned under the Viatris License Agreement and, to a much lesser degree, from license agreements with BioSense Global LLC

(“BioSense”) and Processa Pharmaceuticals, Inc.

As of June 30, 2024, we had cash and cash equivalents of $41.4 million.

License and collaborations revenue inception to date was

derived from a one-time non-refundable payment of $35 million, a milestone payment of $10 million, reimbursement and expected reimbursement of expenses and royalties earned under the Viatris 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

Viatris 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 in the future;

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 RYZUMVI sales become material, or

regulatory approval is obtained and commercialization begins for APX3330 or PS for indications other than RM.

If we fail to complete the development of APX3330, PS or any other product candidate we may pursue in the future, in a timely manner, or

fail to obtain regulatory approval for any of such product candidates, our ability to generate significant revenue would be compromised.

Ocuphire Pharma, Inc.

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

development services in connection with the Viatris License Agreement and we may earn additional revenues from future potential milestone and royalty payments from the agreements with Viatris, BioSense or Processa, or from other license

agreements entered into in 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 RYZUMVI sales become material, or regulatory approval is obtained and commercialization begins for APX3330 or PS for indications other than RM.

If we fail to complete the development of APX3330, PS or any other product candidate

we may pursue in the future in a timely manner or fail to obtain regulatory approval for any of such product candidates, our ability to generate significant revenue would be compromised.

In addition, on August 10, 2023, we entered into the Purchase Agreement with Lincoln Park, which provides that we have the sole right, but not the obligation, to direct Lincoln Park

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

Ocuphire Pharma, Inc.

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 is currently in development as

an oral tablet therapeutic to treat DR in patients with NPDR.

The 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 diabetic macular edema (“DME”), wet age-related macular degeneration (“wAMD”) and geographic atrophy (“GA”) as well as non-ophthalmic indications.

Ocuphire is currently evaluating local delivery routes in addition to the systemic

(oral) route as part of its pipeline expansion into retina and non-ophthalmic indications.

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 is currently in development as an oral tablet therapeutic to treat DR in patients with NPDR.

The 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 diabetic macular edema, wet age-related macular degeneration and geographic atrophy as well as non-ophthalmic indications.

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

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

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

Other Commitments

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

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

Ocuphire Pharma, Inc.

In the course of normal operations, we enter into cancelable purchase commitments from time to time with our suppliers for various key research, clinical and manufacturing services.

The purchase commitments covered by these arrangements are subject to change based on our research and development efforts.

Other Funding Requirements

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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.

Ocuphire Pharma, Inc.

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

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Our financial statements are prepared in accordance with U.S.

These accounting principles require us to make estimates and judgments that can affect the reported

amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented.

We believe that the estimates and judgments upon which we rely are reasonably based

upon information available to us at the time that we make these estimates and judgments.

These accounting principles require us to make estimates and judgments that can affect the reported amounts

of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented.

We believe that the estimates and judgments upon which we rely are reasonably based upon

information available to us at the time that we make these estimates and judgments.

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

The accounting policies

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

The accounting policies that

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

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

Statements 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.

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

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

We have reviewed these critical accounting policies and estimates and related disclosures with the

Audit Committee of our Board of Directors.

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

License and Collaborations Revenue

We account for license and collaborations revenue in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

(“ASC”) 606, Revenue from Contracts with Customers .

We account for license and collaborations revenue in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

606, Revenue from Contracts with Customers .

The guidance provides a unified model to determine how revenue is recognized.

We have entered into license and collaboration agreements which have

revenue recognition implications.

We have entered into license and collaboration agreements which have revenue

recognition implications.

We recognize license and collaborations revenue by first allocating the transaction price of a contract to each performance obligation under the contract based on its stand-alone price.

The stand-alone price of

each performance obligation is based on its fair value utilizing a discounted cash flow approach, taking into consideration assumptions, including projected worldwide net profit for each of the respective programs based on probability

assessments, projections based on internal forecasts, industry data, and information from other guideline companies within the same industry and other relevant factors.

We do not expect to have in the future, significant variable consideration

adjustments related to our existing license and collaborations revenue recognized.

For discussion about the determination of license and collaborations revenue, see Note 9 — License and Collaboration Agreements included in Part 1, Item 1 –

“Financial Statements” of this Report.

The stand-alone price of each

performance obligation is based on its fair value utilizing a discounted cash flow approach, taking into consideration assumptions, including projected worldwide net profit for each of the respective programs based on probability assessments,

projections based on internal forecasts, industry data, and information from other guideline companies within the same industry and other relevant factors.

We do not expect to have in the future, significant variable consideration adjustments

related to our existing license and collaborations revenue recognized.

For discussion about the determination of license and collaborations revenue, see Note 9 — License and Collaboration Agreements included in Part 1, Item 1 – “Financial

Statements” of this Report.

Stock-based Compensation

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For discussions about the application of grant date fair value associated with our stock-based compensation, see Note 7 — Stock-based Compensation included in “ Part 1, Item 1 – Financial Statements ” of this Report.

Ocuphire Pharma, Inc.

Income Tax Assets and Liabilities

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ended December 31, 2023, and see Note 11 — Income Taxes included in “ Part 1, Item 1 – Financial Statements ” of this Report.

Ocuphire Pharma, Inc.

Contingencies

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Not applicable for smaller reporting companies.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in our Exchange Act reports is recorded, processed, summarized and reported

within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely

decisions regarding required disclosure.

We designed and evaluated our disclosure controls and procedures recognizing that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance and

not absolute assurance of achieving the desired control objectives.

Also, the design of a control system must reflect the fact that there are resource constraints and that the benefits of controls must be considered relative to their costs.

of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

The design of any system of controls is based, in part, upon certain assumptions

about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure

controls and procedures, as such term is defined in Rules 13a-15(e) and 15(d)- 15(e) promulgated under the Exchange Act as of June 30, 2024.

Based on this evaluation, our principal executive officer and principal financial officer concluded that

our disclosure controls and procedures were effective as of June 30, 2024.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2024, that have materially affected,

or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Ocuphire Pharma, Inc.

PART II – OTHER INFORMATION

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