Ocuphire Pharma, Inc. - Annual Report: 2020 (Form 10-K)

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On November 5, 2020, Ocuphire (formerly known as Rexahn Pharmaceuticals, Inc., and prior to the merger, referred to as “Rexahn”), completed its reverse merger with Ocuphire Pharma, Inc. (“Private Ocuphire”), in accordance with the terms of the Agreement and Plan of Merger, dated as of June 17, 2020, as amended, by and among Rexahn, Private Ocuphire, and Razor Merger Sub, Inc., a wholly-owned subsidiary of Rexahn (“Merger Sub”) (as amended, the “Merger Agreement”), pursuant to which Merger Sub merged with and into Private Ocuphire, with Private Ocuphire surviving as a wholly owned subsidiary of Rexahn (the “Merger”).

In connection with, and immediately prior to the completion of, the Merger, Rexahn effected a reverse stock split of the common stock, at a ratio of 1-for-4 (the “Reverse Stock Split”). Under the terms of the Merger Agreement, after taking into account the Reverse Stock Split, Rexahn issued shares of its common stock to Private Ocuphire stockholders, based on a common stock exchange ratio of 1.0565 shares of common stock for each share of Private Ocuphire common stock. In connection with the Merger, Rexahn changed its name from “Rexahn Pharmaceuticals, Inc.” to “Ocuphire Pharma, Inc.,” and the business conducted by Rexahn became the business conducted by Private Ocuphire.

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Ocuphire is developing Nyxol and APX3330 for multiple indications. Ocuphire believes the two programs present similar potential advantages: (1) promising clinical data to date; (2) small molecules; (3) convenient dosing route and schedule; (4) potential for first-line or adjunct therapy; and (5) significant commercial potential. In the fourth quarter of 2020, Ocuphire initiated Phase 3 clinical trials for Nyxol in NVD and RM, with announcement of completion of enrollment in Phase 3 RM trial in the fourth quarter of 2020. In the first quarter of 2021,Ocuphire initiated a Phase 2 proof of concept trial in presbyopia for a kit combination of Nyxol and low-dose pilocarpine, a pupil constrictor with a different, but complementary mechanism to Nyxol. In preparation for at least one of the two Phase 3 registration trials for Nyxol, Ocuphire has launched a blow-fill-seal (“BFS”) manufacturing program for preservative-free single use Nyxol eye drops. Furthermore, Ocuphire initiated a 6-month rabbit toxicology study in the first quarter of 2021, completion of which is necessary prior to commencement of the Phase 3 safety exposure trial for chronic indications. Ocuphire also expects to launch a Phase 2 trial for APX3330 in DR and DME in the first quarter of 2021 with a concurrent Phase 2/3 oral tablet manufacturing program. TABLE 1 below summarizes Ocuphire’s current development pipeline of product candidates and their target indications:

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The effects of NVD can be reduced or eliminated by reducing the pupil size to a smaller diameter that prevents the scattering effect without impeding the ability to see at night. NVD can occur naturally (night myopia) and is commonly caused by ocular surgery (“LASIK”). One significant cause of night myopia is keratoconus, an orphan disease that starts at a young age with progressive thinning of the cornea usually due to genetic and environmental causes. Ocuphire estimates there are about 38 million individuals in the US that suffer from NVD, with an estimated 16 million having moderate-to-severe NVD that may be directly addressable with a pupil management approach. Market research conducted by GlobalData of patients who self-report NVD showed 25% completely avoid driving at night. Furthermore, 67% who report moderate or severe NVD would be willing to try an eye drop treatment option. These patients can be segmented by the origins of their vision disturbance. Approximately 44% of NVD are the result of night myopia, followed by approximately 30% from cortical cataracts, 15% from post-intraocular lens (“IOL”) implants, and 10% following LASIK surgery. These conditions span an age range of late teenagers to those 80 years and older.

 

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Glaucoma is a progressive, age-related disease and the leading cause of irreversible vision loss, affecting 60 million people worldwide, including 3 million people in the United States. Glaucoma is the result of increased intraocular pressure (“IOP”) due to a buildup of aqueous humor in the eye. Sustained elevated IOP damages the optic nerve, resulting in loss of vision and blindness. There are currently five classes of approved glaucoma medications, yet for many patients current medications are not sufficiently effective as monotherapy, and taking two or more medications leads to decreased patient adherence. Second-line treatments, especially for patients in normotensive range, are needed to decrease patients’ IOP levels. Potential mechanisms of action of IOP lowering for Nyxol are through episcleral venous pressure and increased aqueous flow. At this time, Ocuphire is only planning to evaluate Nyxol as a second-line add-on to standard of care in glaucoma with a partner.

Diabetic Retinopathy (“DR”) is an eye disease resulting from diabetes, affecting over 7 million patients in the U.S., in which chronically elevated blood sugar levels cause damage to blood vessels in the retina. It is the leading cause of vision loss in adults aged 20–74 years. There are two major types of DR:

 

Diabetic Macular Edema (“DME”) is a complication of DR where the macula swells with fluid leaked from damaged blood vessels as a result of worsening diabetic retinopathy. It is one of the most common reasons for blindness in diabetics, affecting approximately 750,000 patients. DME may cause blurriness in the center of vision, the appearance of straight lines as wavy, colors that look dull or washed out, or blind spots. The pathogenesis of DME involves vascular leakage, retinal ischemia, and release of vasoproliferative growth factors and inflammatory mediators.

 

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Anti-VEGF therapies block the activity of VEGF, but in chronic diseases such as DR and DME, an agent that prevents the production of VEGF poses a large opportunity to improve patient outcomes. Moreover, recent reports in scientific literature demonstrate that diabetic eye disease has an inflammatory component, unrelated to VEGF’s actions. Because inflammation and hypoxic signaling (VEGF production) play crucial roles in both vascular leakage and neovascularization of DR and DME, treatments that impinge upon both pro-inflammatory and hypoxic signaling offer a promising therapeutic strategy. APX3330’s target of Ref-1 may leverage this dual mechanism to reduce the production and hence the quantity of VEGF and prevent inflammatory damage. This potentially allows for improved response to treatment and may extend the duration between invasive treatments for late-stage retinal diseases (DME, wAMD). Moreover, as a potential first-in-class, orally administered product candidate twice a day, it has the potential to be a more convenient option at an earlier stage of disease especially for DR than intravitreal anti-VEGF injections, which are burdensome to patients and have a significant side effect profile including cataract formation, increased intraocular pressure, intraocular infections, and retinal detachments. In clinical trials, APX3330 has been demonstrated to be tolerable with no serious adverse effects (“SAEs”) and no significant acute neurologic, cardiovascular, liver or pulmonary events.

 

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The protected formulation of Nyxol is a sterile, preservative-free, isotonic, buffered aqueous solution containing phentolamine mesylate (1.0%), mannitol, and sodium acetate. The drug substance phentolamine mesylate USP is a small molecule that can be manufactured by reliable and reproducible synthetic processes from readily available starting materials. Ocuphire obtains the active pharmaceutical ingredient for Nyxol from a single supplier in Italy and is presently taking steps to develop a second source. All lots of drug substance phentolamine mesylate and Nyxol drug product used in clinical trials are manufactured under current good manufacturing practices (cGMP), a quality-system regulating manufacturing. Ocuphire is in the process of transitioning the container closure system to an industry standard single use preservative-free blow-fill-seal (“BFS”) container which should further enhance the current stability of Nyxol. Other BFS marketed products have successfully scaled commercial batches at 500 liters. Nyxol has demonstrated stability at 5°C refrigerated for a minimum of two years. Ocuphire is also planning additional stability studies for future lots of both the drug substance and drug product of Nyxol in order to establish expiry and to support regulatory approval and commercial stage.

 

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Ocuphire also owns an issued patent in Mexico that is scheduled to expire in year 2025 and has claims to ophthalmic formulations.

 

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In April 2014, the E.U. passed the new Clinical Trials Regulation (EU) No 536/2014. The new Clinical Trials Regulation, which will replace the Clinical Trials Directive, introduces a complete overhaul of the existing regulation of clinical trials for medicinal products in the E.U., including a new coordinated procedure for authorization of clinical trials that is reminiscent of the mutual recognition procedure for marketing authorization of medicinal products, and increased obligations on sponsors to publish clinical trial results. The entry into application of the Clinical Trials Regulation has been delayed. The Clinical Trials Directive may be replaced with the new  Clinical Trials Regulation in late 2022.

 

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ITEM 1A.

RISK FACTORS

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the data collected from preclinical studies and clinical trials of Ocuphire’s product candidates may not be sufficient to support the submission of an NDA;

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Ocuphire may not be able to demonstrate to the satisfaction of the FDA that its product candidates are safe and effective for any indication;

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the results of clinical trials may not meet the level of statistical significance or clinical significance required by the FDA for approval;

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the FDA may disagree with the number, design, size, conduct, or implementation of Ocuphire’s clinical trials;

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the FDA may not find the data from preclinical studies and clinical trials sufficient to demonstrate that Ocuphire’s product candidates’ clinical and other benefits outweigh the safety risks;

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the FDA may disagree with Ocuphire’s interpretation of data from preclinical studies or clinical trials;

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the FDA may not accept data generated at Ocuphire’s clinical trial sites;

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the FDA may have difficulties scheduling an advisory committee meeting in a timely manner or the advisory committee may recommend against approval of Ocuphire’s application or may recommend that the FDA require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;

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the FDA may require development of a Risk Evaluation and Mitigation Strategy (REMS) as a condition of approval;

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the FDA may identify deficiencies in the manufacturing processes or facilities of third-party manufacturers with which Ocuphire enters into agreements for clinical and commercial supplies; or

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the FDA may change its approval policies or adopt new regulations.

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regulators or IRBs may not authorize Ocuphire or its investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site including due to the ongoing COVID-19 pandemic or other public health emergency;

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government or regulatory delays and changes in regulatory requirements, policy and guidelines may require Ocuphire to perform additional clinical trials or use substantial additional resources to obtain regulatory approval, including due to the ongoing COVID-19 pandemic or other public health emergency;

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Ocuphire may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites, including due to the ongoing COVID-19 pandemic or other public health emergency;

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clinical trials may produce negative or inconclusive results, and Ocuphire may decide, or regulators may require it, to conduct additional clinical trials or abandon product development programs, including due to the ongoing COVID-19 pandemic or other public health emergency;

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the number of patients required for clinical trials may be larger, enrollment in these clinical trials may be slower or participants may drop out of these clinical trials at a higher rate than Ocuphire anticipates, including due to the ongoing COVID-19 pandemic or other public health emergency;

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Ocuphire’s third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to Ocuphire in a timely manner, or at all;

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Ocuphire’s patients or medical investigators may be unwilling to follow its clinical trial protocols;

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Ocuphire might have to suspend or terminate clinical trials for various reasons, including a finding that the participants are being exposed to unacceptable health risks;

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the product candidate may have undesirable side effects or other unexpected characteristics, causing Ocuphire or its investigators, regulators or IRBs to suspend or terminate the trials;

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clinical trials may be delayed or terminated because of the ongoing COVID-19 pandemic or another public health emergency; and

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federal agencies may, due to reduced manpower or diverted resources to the COVID-19 pandemic, require more time to review clinical trial protocols and INDs.

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severity of the disease under investigation;

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availability and efficacy of medications already approved for the disease under investigation;

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eligibility criteria for the trial in question;

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competition for eligible patients with other companies conducting clinical trials for product candidates seeking to treat the same indication or patient population;

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its payments for conducting clinical trials;

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perceived risks and benefits of the product candidate under study;

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efforts to facilitate timely enrollment in clinical trials;

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patient referral practices of physicians;

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the ability to monitor patients adequately during and after treatment;

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proximity and availability of clinical trial sites for prospective patients;

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the ability of patients to safely participate in clinical trials during the COVID-19 pandemic or other public health emergencies; and

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the ability to monitor patients adequately during periods in which social distancing is required or recommended due to the COVID-19 pandemic.

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regulatory authorities may withdraw their approval of the product;

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Ocuphire may be required to recall the product, change the way this product is administered, conduct additional clinical trials, or change the labeling or distribution of the product (including REMS);

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additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the product;

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Ocuphire may be subject to fines, injunctions, or the imposition of civil or criminal penalties;

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Ocuphire could be sued and held liable for harm caused to patients;

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the product may be rendered less competitive and sales may decrease; or

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Ocuphire’s reputation may suffer generally both among clinicians and patients.

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obtain favorable results from and complete the clinical development of both Nyxol and APX3330 for their planned indications, including successful completion of the Phase 2 and Phase 3 trials for these indications;

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submit an application to regulatory authorities for both product candidates and receive marketing approval in the United States and foreign countries;

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contract for the manufacture of commercial quantities of its product candidates at acceptable cost levels;

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establish sales and marketing capabilities to effectively market and sell its product candidates in the United States or other markets, alone or with a pharmaceutical partner; and

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achieve market acceptance of its product candidates in the medical community and with third-party payors.

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the scope, size, rate of progress, results, and costs of researching and developing its product candidates, and initiating and completing its preclinical studies and clinical trials;

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the cost, timing and outcome of its efforts to obtain marketing approval for its product candidates in the United States and other countries, including to fund the preparation and filing of an NDA with the FDA for its product candidates and to satisfy related FDA requirements and regulatory requirements in other countries;

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the number and characteristics of any additional product candidates it develops or acquires, if any;

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Ocuphire’s ability to establish and maintain collaborations on favorable terms, if at all;

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the amount of revenue, if any, from commercial sales, should its product candidates receive marketing approval;

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the costs associated with commercializing its product candidates, if Ocuphire receives marketing approval, including the cost and timing of developing sales and marketing capabilities or entering into strategic collaborations to market and sell its product candidates;

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the cost of manufacturing its product candidates or products Ocuphire successfully commercializes; and

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the costs associated with general corporate activities, such as the cost of filing, prosecuting and enforcing patent claims and making regulatory filings.

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litigation involving patients taking Ocuphire’s drugs;

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restrictions on such drugs, manufacturers, or manufacturing processes;

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restrictions on the labeling or marketing of a drug;

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restrictions on drug distribution or use;

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requirements to conduct post-marketing studies or clinical trials;

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warning letters or untitled letters;

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withdrawal of the drugs from the market;

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refusal to approve pending applications or supplements to approved applications that Ocuphire submits;

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product recall or public notification or medical product safety alerts to healthcare professionals;

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fines, restitution, or disgorgement of profits or revenues;

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suspension or withdrawal of marketing approvals;

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damage to relationships with any potential collaborators;

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unfavorable press coverage and damage to Ocuphire’s reputation;

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refusal to permit the import or export of drugs;

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product seizure; or

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injunctions or the imposition of civil or criminal penalties.

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the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;

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the federal false claims and civil monetary penalties laws, including the civil False Claims Act, impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government;

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HIPAA imposes criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, also imposes obligations, including mandatory contractual terms, on certain people and entities with respect to safeguarding the privacy, security, and transmission of individually identifiable health information;

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the federal Physician Payments Sunshine Act under the Affordable Care Act requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report specially to the Centers for Medicare & Medicaid Services within the U.S. Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests; and

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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures. Certain state and foreign laws also govern the privacy and security of health information in ways that differ from each other and often are not preempted by HIPAA, thus complicating compliance efforts.

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comply with the regulations of the FDA and applicable non-U.S. regulators;

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provide accurate information to the FDA and applicable non-U.S. regulators;

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comply with healthcare fraud and abuse laws and regulations in the United States and abroad;

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report financial information or data accurately; or

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disclose unauthorized activities to Ocuphire.

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Presbysol® (AGN-190584), with 1.25% pilocarpine, developed by Allergan plc. (NDA application submitted February 2021).

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Presbidrops® (CSF-1), with low dose pilocarpine and a secondary agent (lubricant), developed by Orasis Pharmaceuticals Ltd.

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Liquid Vision®, with aceclidine (another miotic agent), developed by Presbyopia Therapies, LLC.

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MicroLine®, which is a microdose formulation of pilocarpine, developed by Eyenovia, Inc.

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KT-101, which uses pilocarpine in the AcuStream delivery system, developed by Kedalion Therapeutics, Inc.

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BrimocholTM, with brimonidine and carbachol (both are miotic agents), developed by Visus Therapeutics, Inc.

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UNR844, which uses a mechanism that involves softening the lens to increase near visual acuity, developed by Novartis AG (originally Encore Vision, Inc.).

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Lucentis® (ranibizumab) and Avastin® (bevacizumab), which are anti-VEGF monoclonal antibody intravitreal injections, developed by Genentech, Inc.

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EYLEA® (aflibercept), a VEGF inhibitor intravitreal injection, developed by Regeneron Pharmaceuticals.

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Beovu® Brolucizumab, an anti-VEGF monoclonal antibody intravitreal injection, developed by Novartis AG.

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MACUGEN® (pegaptanib sodium injection), a selective inhibitor of VEGF-165, developed by Bausch + Lomb.

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Ozurdex® (dexamethasone), a corticosteroid IVT implant, developed by Allergan plc.

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Iluvien (fluocinolone acetonide), a corticosteroid IVT implant, developed by Alimera Sciences, Inc.

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Abicipar, an anti-VEGF intravitreal injection with a long duration of action, developed by Allergan plc and Molecular Partners.

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Farcimab, a bispecific antibody intravitreal injection that suppresses both VEGF and Angiopoietin-2, developed by Genentech, Inc. and Roche AG.

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KSI-301, an anti-VEGF antibody intravitreal injection coupled with a biopolymer that is intended to increase the time between injections, developed by Kodiak Sciences.

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OPT-302, an intravitreal injection which binds to multiple types of VEGF receptors that could be used with other anti-VEGF agents, developed by Opthea Limited.

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ALG-1001, an integrin peptide therapy intravitreal injection that is being evaluated as a sequential or in-combination therapy with bevacizumab in patients with DME, developed by Allegro Ophthalmics, LLC.

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RG-7774, an orally administered selective CB2 (Cannabinoid 2) receptor agonist that is being evaluated in patients with moderately severe to severe non-proliferative diabetic retinopathy, developed by Hoffmann-LA Roche, AG.

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the inability to recruit and retain adequate numbers of effective sales and marketing personnel or enter into distribution agreements with third parties;

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the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe its product candidate;

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the lack of complementary products to be offered by sales personnel, which may put Ocuphire at a competitive disadvantage relative to companies with more extensive product lines;

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unforeseen costs and expenses associated with creating an independent sales and marketing organization; and

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the inability to obtain sufficient coverage and reimbursement from third-party payors and governmental agencies.

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efficacy and potential advantages compared to alternative treatments;

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the ability to offer Ocuphire’s product for sale at competitive prices;

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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

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any restrictions on the use of Ocuphire’s product together with other medications;

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interactions of its product with other medicines patients are taking;

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inability of certain types of patients to take Ocuphire’s product;

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demonstrated ability to treat patients and, if required by any applicable regulatory authority in connection with the approval for target indications as compared with other available therapies;

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the relative convenience and ease of administration as compared with other treatments available for approved indications;

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the prevalence and severity of any adverse side effects;

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limitations or warnings contained in the labeling approved by the FDA;

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availability of alternative treatments already approved or expected to be commercially launched in the near future;

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the effectiveness of Ocuphire’s sales and marketing strategies;

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Ocuphire’s ability to increase awareness through marketing efforts;

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guidelines and recommendations of organizations involved in research, treatment and prevention of various diseases that may advocate for alternative therapies;

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Ocuphire’s ability to obtain sufficient third-party coverage and adequate reimbursement;

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the willingness of patients to pay out-of-pocket in the absence of third-party coverage; and

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physicians or patients may be reluctant to switch from existing therapies even if potentially more effective, safe or convenient.

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decreased demand for any product candidate that Ocuphire is developing;

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injury to Ocuphire’s reputation and significant negative media attention;

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withdrawal of clinical trial participants;

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increased FDA warnings on product labels;

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significant costs to defend the related litigation;

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substantial monetary awards to trial participants or patients;

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distraction of management’s attention from Ocuphire’s primary business;

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loss of revenue; and

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the inability to commercialize any product candidate that Ocuphire may develop.

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have staffing difficulties;

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fail to comply with contractual obligations;

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experience regulatory compliance issues;

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undergo changes in priorities or become financially distressed; or

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form relationships with other entities, some of which may be Ocuphire’s competitors.

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collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;

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collaborators may not perform their obligations as expected;

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collaborators may not pursue development and commercialization or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;

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collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing;

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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with its product candidate if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more attractive than Ocuphire’s;

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a collaborator with marketing and distribution rights to one or more product candidates may not commit sufficient resources to the marketing or distribution of any such product candidate;

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collaborators may not properly maintain or defend Ocuphire’s intellectual property rights or may use its proprietary information in such a way as to invite litigation that could jeopardize or invalidate Ocuphire’s proprietary information or expose Ocuphire to litigation;

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collaborators may infringe the intellectual property rights of third parties, which may expose Ocuphire to litigation and potential liability;

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disputes may arise between the Ocuphire and collaborators that result in the delay or termination of research, development, or commercialization of its product candidates, or in litigation or arbitration that diverts management attention and resources;

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Ocuphire may lose certain valuable rights under circumstances identified in its collaborations, including if it undergoes a change of control;

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collaborations may be terminated and such terminations may create a need for additional capital to pursue further development or commercialization of the applicable product candidates;

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collaborators may learn about Ocuphire’s discoveries and use this knowledge to compete with Ocuphire in the future;

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the results of collaborators’ preclinical or clinical studies could harm or impair other development programs;

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there may be conflicts between different collaborators that could negatively affect those collaborations and potentially others;

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the number and nature of Ocuphire’s collaborations could adversely affect its attractiveness to potential future collaborators or acquirers;

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collaboration agreements may not lead to development or commercialization of its product candidate in the most efficient manner or at all. If a present or future collaborator of Ocuphire were to be involved in a business combination, the continued pursuit and emphasis on its product development or commercialization program under such collaboration could be delayed, diminished, or terminated; and

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collaborators may be unable to obtain the necessary marketing approvals.

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increased operating expenses and cash requirements;

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the assumption of indebtedness or contingent liabilities;

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the issuance of Ocuphire’s equity securities which would result in dilution to Ocuphire Stockholders;

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assimilation of operations, intellectual property, products and product candidates of an acquired company, including difficulties associated with integrating new personnel;

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the diversion of management’s attention from Ocuphire’s existing product candidates and initiatives in pursuing such an acquisition or strategic partnership;

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retention of key employees, the loss of key personnel, and uncertainties in Ocuphire’s ability to maintain key business relationships;

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risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and regulatory approvals; and

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Ocuphire’s inability to generate revenue from acquired intellectual property, technology and/or products sufficient to meet its objectives or even to offset the associated transaction and maintenance costs.

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any of Ocuphire’s patents, or any of its pending patent applications, if issued, will include claims having a scope sufficient to protect its product candidates;

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any of its pending patent applications will result in issued patents;

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Ocuphire will be able to successfully commercialize its product candidates, if approved, before its relevant patents expire;

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Ocuphire was the first to make the inventions covered by each of its patents and pending patent applications;

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Ocuphire was the first to file patent applications for these inventions;

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others will not develop similar or alternative technologies that do not infringe Ocuphire’s patents;

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any of Ocuphire’s patents will be valid and enforceable;

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any patents issued to Ocuphire will provide a basis for an exclusive market for its commercially viable products, will provide Ocuphire with any competitive advantages or will not be challenged by third parties;

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Ocuphire will develop additional proprietary technologies or product candidates that are separately patentable; or

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that Ocuphire’s commercial activities or products will not infringe upon the patents of others.

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the scope of rights granted under the license agreement and other interpretation-related issues;

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the extent to which Ocuphire’s product candidates, technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

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the sublicensing of patent and other rights under Ocuphire’s collaborative development relationships;

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Ocuphire’s diligence obligations under the license agreement and what activities satisfy those diligence obligations;

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the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property; and

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the priority of invention of patented technology.

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compliance with differing or unexpected regulatory requirements for its product candidates;

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different medical practices and customs affecting acceptance of its product candidates, if approved, or any other approved product in the marketplace;

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language barriers;

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the interpretation of contractual provisions governed by foreign law in the event of a contract dispute;

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difficulties in staffing and managing foreign operations, and an inability to control commercial or other activities where it is relying on third parties;

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workforce uncertainty in countries where labor unrest is more common than in the United States;

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potential liability under the Foreign Corrupt Practice Act of 1977 or comparable foreign regulations;

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production shortages resulting from any events affecting raw material supply or manufacturing capability abroad;

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foreign government taxes, regulations, and permit requirements;

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U.S. and foreign government tariffs, trade restrictions, price and exchange controls, and other regulatory requirements;

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economic weakness, including inflation, natural disasters, war, events of terrorism, or political instability in particular foreign countries;

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fluctuations in currency exchange rates, which could result in increased operating expenses and reduced revenues;

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compliance with tax, employment, immigration, and labor laws, regulations, and restrictions for employees living or traveling abroad;

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changes in diplomatic and trade relationships; and

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challenges in enforcing its contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States.

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interruption in global manufacturing and shipping that has affected, and may continue to affect the transport of clinical trial materials and materials, including testing equipment and personal protective equipment;

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changes in local regulations as part of a response to the COVID-19 coronavirus outbreak which may result in unexpected costs;

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delay in the timing of interactions with the FDA due to absenteeism by federal employees or by the diversion of their efforts and attention to approval of other therapeutics or other activities related to COVID-19;

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impacts on Ocuphire’s ability to secure additional financing on favorable terms; and

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modifications to the Ocuphire convertible notes.

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the announcement of new products or product enhancements by Ocuphire or its competitors;

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changes in Ocuphire's relationships with its licensors or other strategic partners;

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developments concerning intellectual property rights and regulatory approvals;

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variations in Ocuphire's and Ocuphire's competitors’ results of operations;

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substantial sales of shares of our common stock due to the release of lock-up agreements;

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the announcement of clinical trial results;

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the announcement of potentially dilutive financings;

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changes in earnings estimates or recommendations by securities analysts;

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changes in the structure of healthcare payment systems; and

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developments and market conditions in the pharmaceutical and biotechnology industries, including due to the COVID-19 pandemic.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

ITEM 2.

PROPERTIES

ITEM 3.

LEGAL PROCEEDINGS

ITEM 4.

MINE SAFETY DISCLOSURES

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 6.

SELECTED FINANCIAL DATA

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

•

continues clinical trials for Nyxol, APX3330 and for any other product candidate in its future pipeline;

•

continues preclinical studies for Nyxol, APX3330 and for any other product candidate in its future pipeline;

•

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

•

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

•

contracts to manufacture its product candidates;

•

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

•

maintains, expands and protects its intellectual property portfolio;

•

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

•

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

•

operates as a public company.

•

per patient trial costs;

•

the number of patients that participate in the trials;

•

the number of sites included in the trials;

•

the countries in which the trials are conducted;

•

the length of time required to enroll eligible patients;

•

the number of doses that patients receive;

•

the drop-out or discontinuation rates of patients;

•

potential additional safety monitoring or other studies requested by regulatory agencies;

•

the duration of patient follow-up;

•

the phase of development of the product candidate;

•

arrangements with contract research organizations and other service providers; and

•

the efficacy and safety profile of the product candidates.

		For the Year Ended December 31,
		2020				2019				Change
Operating expenses:
General and administrative		$	2,818			$	1,820			$	998
Research and development			6,648				2,373				4,275
Acquired in‑process research and development			10,502				—				10,502
Total operating expenses			19,968				4,193				15,775
Loss from operations			(19,968	)			(4,193	)			(15,775	)
Interest expense			(6,847	)			(1,409	)			(5,438	)
Fair value change in derivative and warrant liabilities			(1,486	)			(499	)			(987	)
Gain on note extinguishment			3,672				—				3,672
Other income (expense), net			9				(68	)			77
Loss before income taxes			(24,620	)			(6,169	)			(18,451	)
Provision for income taxes			—				—				—
Net loss		$	(24,620	)		$	(6,169	)		$	(18,451	)

•

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

•

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

•

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

•

contracts to manufacture its product candidates;

•

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

•

maintains, expands and protects its intellectual property portfolio;

•

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

•

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

•

operates as a public company.

•

Qualified Financing or IPO: An amount of shares of Ocuphire common stock equal to 135% of the Note Value divided by the per share price of Ocuphire common stock issued to purchasers in the Qualified Financing or IPO.

•

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

•

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

•

IPO: An amount of shares of Ocuphire common stock equal to the greater of: (i) 150% of the Note Value divided by the per share price of Ocuphire common stock issued to purchasers in the IPO, and (ii) 100% of the Note Value divided by the per share price of $10.37.

•

CIC: An amount of shares of Ocuphire common stock equal to the greater of: (i) 200% of the Note Value divided by the per share price of Ocuphire common stock based on the valuation of such CIC, and (ii) 100% of the Note Value divided by the per share price of $10.37.

•

Qualified Financing: An amount of shares of Ocuphire common stock equal to 150% of the Note Value divided by the per share price of Ocuphire common stock issued to purchasers in the Qualified Financing.

•

Reverse Merger: Either shares of Ocuphire common stock issued in the Reverse Merger or equity securities of the Reverse Merger counterparty, in an amount equal to the greater of: (i) 150% of the Note Value divided by the per share price at which such shares were issued to either stockholders of Ocuphire or stockholders of the Reverse Merger counterparty, and (ii) 100% Note Value divided by the per share price of $10.37.

		For the Year Ended December 31,
		2020				2019
Net cash used in operating activities		$	(6,797	)		$	(3,593	)
Net cash provided by (used in) investing activities			539				(25	)
Net cash provided by financing activities			21,120				4,704
Net increase in cash and cash equivalents		$	14,862			$	1,086

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.

CONTROLS AND PROCEDURES

ITEM 9B.

OTHER INFORMATION

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11.

EXECUTIVE COMPENSATION

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

ITEM 16.

FORM 10-K SUMMARY

ITEM 8.

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm	133
Consolidated Balance Sheets	135
Consolidated Statements of Comprehensive Loss	136
Consolidated Statements of Changes in Stockholders' Deficit	137
Consolidated Statements of Cash Flows	138
Notes to Consolidated Financial Statements	139

		Accounting for Warrants
	Description of the Matter	As discussed in Notes 1 and 9 to the consolidated financial statements, in connection with the merger transaction, the Company issued Series A and Series B warrants (collectively, the Warrants) to purchase additional common stock on November 19, 2020 (the Warrant Closing Date). As of the Warrant Closing Date, the Series A warrants were determined to be liability classified instruments and the Series B warrants were determined to be equity classified instruments.
		Auditing the accounting conclusions for the issuance of the Warrants was challenging because of the complex provisions affecting valuation and classification and required extensive audit effort. The accounting for the issuance of the Warrants involved an assessment of the particular features of each type of warrant, and the impact of those features on the accounting and classification of the Warrants.
	How we Addressed the Matter in Our Audit	To test the accounting and determine proper classification of the Warrants, our audit procedures included, among others, inspecting the agreements and evaluating the completeness and accuracy of the Company’s technical accounting analyses, application of the relevant accounting guidance and review of legal interpretation from counsel. Our audit procedures also included the involvement of subject matter resources to assist in evaluating management’s conclusion on the interpretation and application of the relevant accounting literature.

		As of December 31,
		2020				2019
Assets
Current assets:
Cash and cash equivalents		$	16,399			$	1,537
Prepaids and other assets			1,269				149
Deferred costs			—				76
Total current assets			17,668				1,762
Property and equipment, net			14				22
Total assets		$	17,682			$	1,784
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable		$	1,214			$	342
Accrued expenses			1,971				621
Convertible notes			—				4,977
Convertible notes from related parties			—				690
Premium conversion derivatives			—				2,714
Total current liabilities			3,185				9,344
Warrant liabilities			27,964				—
Total liabilities			31,149				9,344
Commitments and contingencies (Note 3 and Note 9)
Stockholders’ deficit
Preferred stock, par value $0.0001; 10,000,000 and 625,000 shares authorized as of December 31, 2020 and 2019, respectively; no shares issued and outstanding at December 31, 2020 and 2019.			—				—
Common stock, par value $0.0001; 75,000,000 and 5,000,000 shares authorized as of December 31, 2020 and 2019, respectively; 10,882,495 and 2,852,485 shares issued and outstanding at December 31, 2020 and 2019, respectively.			1				—
Additional paid-in capital			19,207				495
Accumulated deficit			(32,675	)			(8,055	)
Total stockholders’ deficit			(13,467	)			(7,560	)
Total liabilities and stockholders’ deficit		$	17,682			$	1,784

		For the Year Ended December 31,
		2020				2019
Operating expenses:
General and administrative		$	2,818			$	1,820
Research and development			6,648				2,373
Acquired in-process research and development			10,502				—
Total operating expenses			19,968				4,193
Loss from operations			(19,968	)			(4,193	)
Interest expense			(6,847	)			(1,409	)
Fair value change in derivative and warrant liabilities			(1,486	)			(499	)
Gain on note extinguishment			3,672				—
Other income (expense), net			9				( 68	)
Loss before income taxes			(24,620	)			(6,169	)
Benefit (provision) for income taxes			—				—
Net loss			(24,620	)			(6,169	)
Other comprehensive loss, net of tax			—				—
Comprehensive loss		$	(24,620	)		$	(6,169	)
Net loss per share:
Basic and diluted (Note 10)		$	(5.28	)		$	(2.17	)
Number of shares used in per share calculations:
Basic and diluted			4,661,110				2,844,832

		Common Stock								Additional Paid–In				Accumulated				Total Stockholders’
		Shares				Amount				Capital				Deficit				Deficit
Balance at December 31, 2018			2,852,485			$	—			$	187			$	(1,886	)		$	(1,699	)
Share-based compensation			—				—				308				—				308
Net and comprehensive loss			—				—				—				(6,169	)			(6,169	)
Balance at December 31, 2019			2,852,485				—				495				(8,055	)			(7,560	)
Issuance of common stock in exchange for in-process research and development			891,422				—				2,126				—				2,126
Gain on note extinguishment			—				—				971				—				971
Conversion of convertible notes into common stock upon close of the merger			977,128				—				6,953				—				6,953
Issuance of common stock and warrants in connection with pre-merger financing			4,999,988				1				(1	)			—				—
Issuance costs attributed to pre-merger financing			—				—				(1,080	)			—				(1,080	)
Issuance of common stock, warrants and options to former Rexahn stockholders and effect of  asset acquisition			1,120,800				—				8,115				—				8,115
Share–based compensation			—				—				1,506				—				1,506
Reclassification of Rexahn warrants from liability to equity			—				—				64				—				64
Exercise of stock options			40,672				—				58				—				58
Net and comprehensive loss			—				—				—				(24,620	)			(24,620	)
Balance at December 31, 2020			10,882,495			$	1			$	19,207			$	(32,675	)		$	(13,467	)

		For the Year Ended December 31,
		2020				2019
Operating activities
Net loss		$	(24,620	)		$	(6,169	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation			1,506				308
Depreciation			8				3
Non-cash acquired in-process research and development			10,502				—
Gain on note extinguishment			(3,672	)			—
Non-cash interest on convertible notes			492				252
Non-cash interest on convertible notes – related party			51				42
Non-cash discount amortization on convertible notes			873				1,014
Non-cash discount amortization on convertible notes – related party			71				101
Fair value change in derivative and warrant liabilities			1,486				499
Non-cash interest attributed to Series A warrant issuance			4,671				—
Issuance costs attributed to Series A warrants			689				—
Change in assets and liabilities:
Prepaid expenses and other assets			(906	)			58
Accounts payable			792				(168	)
Accrued and other liabilities			1,260				467
Net cash used in operating activities			(6,797	)			(3,593	)
Investing activities
Cash acquired in connection with asset acquisition			2,014				—
Transaction costs in connection with asset acquisition			(1,475	)			—
Purchases of property and equipment			—				(25	)
Net cash provided by (used in) investing activities			539				(25	)
Financing activities
Proceeds from pre-merger financing			21,150				—
Proceeds from issuance of convertible notes			2,197				4,383
Proceeds from issuance of convertible notes – related party			—				323
Issuance costs attributed to pre-merger financing			(1,769	)			—
Issuance costs attributed to convertible notes			(10	)			(2	)
Settlement of Rexahn warrants			(506	)			—
Exercise of stock options			58				—
Net cash provided by financing activities			21,120				4,704
Net increase in cash and cash equivalents			14,862				1,086
Cash and cash equivalents at beginning of period			1,537				451
Cash and cash equivalents at end of period		$	16,399			$	1,537
Supplemental disclosure of cash flow information:
Cash paid for income taxes		$	—			$	—
Cash paid for interest		$	—			$	—
Supplemental non-cash financing transactions:
Non-cash conversion of convertible notes to common stock		$	9,365			$	—
Common stock and warrants issued in connection with the asset acquisition		$	8,883			$	—
Unpaid transaction costs in connection with asset acquisition		$	100			$	—
Net assets assumed in connection with asset acquisition		$	68			$	—
Bifurcation and modification of premium conversion derivative related to convertible notes		$	831			$	1,910
Unpaid deferred offering costs		$	—			$	76
Proceeds receivable from convertible note issuance		$	—			$	125