IRD 10-Q Quarter ended March 31, 2021

Delaware		11-3516358
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

37000 Grand River Avenue, Suite 120 Farmington Hills, MI		48335
(Address of Principal Executive Offices)		(Zip Code)

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share		OCUP		The Nasdaq Stock Market LLC

Large accelerated filer	☐	Non-accelerated filer	☒
Accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

		Page
	PART 1 – FINANCIAL INFORMATION	2
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	2
	Condensed  Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020 (unaudited)	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three months ended March 31, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4 .	Controls and Procedures	26
	PART II – OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
SIGNATURES		29

Item 1.

Financial Statements

		As of
		March 31, 2021				December 31, 2020
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	10,597			$	16,399
Prepaids and other assets			1,428				1,269
Deferred costs			88				—
Total current assets			12,113				17,668
Property and equipment, net			13				14
Total assets		$	12,126			$	17,682
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable		$	1,415			$	1,214
Accrued expenses			895				1,971
Total current liabilities			2,310				3,185
Warrant liabilities			—				27,964
Total liabilities			2,310				31,149
Commitments and contingencies (Note 4)
Stockholders’ equity (deficit)
Preferred stock, par value $0.0001; 10,000,000 shares authorized as of March 31, 2021 and December 31, 2020; no shares issued and outstanding at March 31, 2021 and December 31, 2020.			—				—
Common stock, par value $0.0001; 75,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 10,929,881 and 10,882,495 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively.			1				1
Additional paid-in-capital			81,504				19,207
Accumulated deficit			(71,689	)			(32,675	)
Total stockholders’ equity (deficit)			9,816				(13,467	)
Total liabilities and stockholders’ equity (deficit)		$	12,126			$	17,682

		Three Months Ended March 31,
		2021				2020
Operating expenses:
General and administrative		$	1,704			$	391
Research and development			3,482				218
Acquired in‑process research and development			—				2,126
Total operating expenses			5,186				2,735
Loss from operations			(5,186	)			(2,735	)
Interest expense			—				(554	)
Fair value change in warrant liabilities and premium conversion derivatives			(33,829	)			198
Other income			1				3
Loss before income taxes			(39,014	)			(3,088	)
Benefit (provision) for income taxes			—				—
Net loss			(39,014	)			(3,088	)
Other comprehensive loss, net of tax			—				—
Comprehensive loss		$	(39,014	)		$	(3,088	)
Net loss per share:
Basic and diluted (Note 10)		$	(3.57	)		$	(0.87	)
Number of shares used in per share calculations:
Basic and diluted			10,923,651				3,547,990

		Common Stock								Additional Paid–In				Accumulated				Total
		Shares				Amount				Capital				Deficit				Equity (Deficit)
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
Share–based compensation			—				—				61				—				61
Net and comprehensive loss			—				—				—				(3,088	)			(3,088	)
Balance at March 31, 2020			3,743,907			$	—			$	2,682			$	(11,143	)		$	(8,461	)
Balance at December 31, 2020			10,882,495			$	1			$	19,207			$	(32,675	)		$	(13,467	)
Reclassification of Series A warrant liability to  equity			—				—				61,793				—				61,793
Share–based compensation			40,000				—				494				—				494
Exercise of stock options			7,386				—				10								10
Net and comprehensive loss			—				—				—				(39,014	)			(39,014	)
Balance at March 31, 2021			10,929,881			$	1			$	81,504			$	(71,689	)		$	9,816

		Three Months Ended March 31,
		2021				2020
Operating activities
Net loss		$	(39,014	)		$	(3,088	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation			494				61
Depreciation			1				5
Non-cash acquired in-process research and development			—				2,126
Non-cash interest on convertible notes			—				123
Non-cash interest on convertible notes – related party			—				15
Non-cash discount amortization on convertible notes			—				376
Non-cash discount amortization on convertible notes – related party			—				40
Fair value change in warrant liabilities and premium conversion derivatives			33,829				(198	)
Change in assets and liabilities:
Prepaid expenses and other assets			(159	)			(2	)
Accounts payable			200				10
Accrued and other liabilities			(1,163	)			(200	)
Net cash used in operating activities			(5,812	)			(732	)
Investing activities
Net cash used in investing activities			—				—
Financing activities
Proceeds from issuance of convertible notes			—				448
Exercise of stock options			10				—
Net cash provided by financing activities			10				448
Net decrease in cash and cash equivalents			(5,802	)			(284	)
Cash and cash equivalents at beginning of period			16,399				1,537
Cash and cash equivalents at end of period		$	10,597			$	1,253
Supplemental disclosure of cash flow information:
Cash paid for income taxes		$	—			$	—
Cash paid for interest		$	—			$	—
Supplemental non-cash financing transactions:
Non-cash reclassification of Series A warrant liability to equity		$	61,793			$	—
Bifurcation of premium conversion derivative related to convertible notes		$	—			$	831
Unpaid deferred offering and issuance costs		$	88			$	107
Net change in proceeds receivable from convertible note issuance		$	—			$	1,750

1.	Company Description and Summary of Significant Accounting Policies

As of March 31, 2021

Description

Total

Level 1

Level 2

Level 3

Liabilities:

Warrant liabilities

$

—

$

—

$

—

$

—

Total liabilities at fair value

$

—

$

—

$

—

$

—

		As of December 31, 2020
Description		Total				Level 1				Level 2				Level 3
Liabilities:
Warrant liabilities		$	27,964			$	—			$	—			$	27,964
Total liabilities at fair value		$	27,964			$	—			$	—			$	27,964

		2021				2020
Warrant liabilities
Balance as of beginning of period		$	27,964			$	—
Change in fair value of warrant liability			33,829				—
Reclassification of Series A warrants from liability to equity			(61,793	)			—
Balance as of end of period		$	—			$	—

		2021				2020
Premium conversion derivatives
Balance as of beginning of period		$	—			$	2,714
Value assigned to the underlying derivatives in connection with convertible notes			—				831
Change in fair value of premium conversion derivatives			—				(198	)
Balance as of end of period		$	—			$	3,347

2.

Merger

3.	Pre-Merger Financing

5.	Supplemental Balance Sheet Information

		March 31, 2021				December 31, 2020
Prepaids		$	1,402			$	1,243
Other			26				26
Total prepaids and other assets		$	1,428			$	1,269

		March 31, 2021				December 31, 2020
Equipment		$	20			$	20
Furniture			5				5
Total property and equipment		$	25				25
Less accumulated depreciation			(12	)			(11	)
Property and equipment, net		$	13			$	14

		March 31,				December 31,
		2021				2020
R&D services and supplies		$	473			$	1,440
Payroll			146				320
Professional services			162				186
Deferred issuance costs			88				—
Other			26				25
Total		$	895			$	1,971

6.	Convertible Notes

•

IPO: The Convertible Notes would have automatically converted into the number of fully paid and non-assessable shares of the Company’s common stock equal to One Hundred and Seventy-Five Percent (175%) times Note Value divided by the per share price such shares were issued to purchasers of the Company’s equity securities in the IPO rounded to the nearest whole share.

•

CIC: The Convertible Notes would have automatically converted prior to the effectiveness of such CIC into that number of fully paid and non-assessable shares of the Company’s common stock equal to Two Hundred Percent (200%) of the Note Value divided by the per share price of the Company’s common stock at which the Company’s common stock was valued in such CIC (after giving effect to such conversion). The Convertible Note holder would have been entitled to the same contractual rights and would have been bound by the same restrictions and obligations as the other stockholders of the Company in such CIC.

•

Qualified Financing : The Convertible Notes would have automatically converted into that number of fully paid and non-assessable shares of the Company that were issued by the Company in the Qualified Financing, determined by dividing an amount equal to One Hundred and Seventy-Five Percent (175%) times the Note Value by the per share price such shares of the Company were issued to purchasers of the Company’s equity securities in the Qualified Financing, rounded to the nearest whole share. The Convertible Note holder would have been entitled to the same contractual rights and would have been bound by the same restrictions and obligations as the other purchasers of shares in the Qualified Financing. A Qualified Financing was defined as a sale and issuance of capital stock of the Company (or its successor) in a single transaction or series of related transactions resulting in gross proceeds to the Company of not less than $5,000,000 (including new equity investment of at least $1,000,000 plus the sum of the outstanding principal amount of the Convertible Notes being so converted under this provision).

•

Reverse Merger (excluding close of Merger with Rexahn) : The Convertible Notes would have automatically converted into that number of fully paid and non-assessable shares of the Combined Company whose shares were publicly traded in the United States or other jurisdiction following the completion of the Reverse Merger (the “Reverse Merger Parent”), determined by dividing an amount equal to One Hundred and Seventy-Five Percent (175%) times the Note Value divided by the per share price at which such shares were issued by the Reverse Merger Parent in such Reverse Merger, rounded to the nearest whole share. The Convertible Note holder would have been entitled to the same contractual rights and would have been bound by the same restrictions and obligations as the other stockholders of the Company in the Reverse Merger.

7.	Related Party Transactions

8.	Share-based Compensation

		March 31,
		2021				2020
General and administrative		$	193			$	42
Research and development			301				19
Total share-based compensation		$	494			$	61

		2021				2020
Expected stock price volatility			86.6	%			—	%
Expected life of options (years)			5.6				—
Expected dividend yield			—	%			—	%
Risk free interest rate			0.8	%			—	%

9.	Apexian Sublicense Agreement

10.	Net loss per share

		March 31,
		2021				2020
Series A Warrants and Series B Warrants			7,374,172				—
Stock options			1,818,612				1,029,781
Restricted stock awards			4,474				—
Former Rexahn warrants			66,538				—
Former Rexahn options			123				—

11.	Income Taxes

12.	Subsequent Events

Item 2.

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

•

continues to operate 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 Three Months Ended March 31,
		2021				2020				Change
Operating expenses:
General and administrative		$	1,704			$	391			$	1,313
Research and development			3,482				218				3,264
Acquired in‑process research and development			—				2,126				(2,126	)
Total operating expenses			5,186				2,735				2,451
Loss from operations			(5,186	)			(2,735	)			(2,451	)
Interest expense			—				(554	)			554
Fair value change in warrant liabilities and premium conversion derivatives			(33,829	)			198				(34,027	)
Other income			1				3				(2	)
Loss before income taxes			(39,014	)			(3,088	)			(35,926	)
Provision for income taxes			—				—				—
Net loss		$	(39,014	)		$	(3,088	)		$	(35,926	)

•

continues clinical trials and 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 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

•

continues to operate 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 Three Months Ended March 31,
		2021				2020
Net cash used in operating activities		$	(5,812	)		$	(732	)
Net cash provided by (used in) investing activities			—				—
Net cash provided by financing activities			10				448
Net decrease in cash and cash equivalents		$	(5,802	)		$	(284	)

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

EXHIBIT
NUMBER		DESCRIPTION OF DOCUMENT
3.1	​	Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Appendix G to the Registrant’s Definitive Proxy Statement on Schedule 14A, filed on April 29, 2005).
3.2	​	Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on May 5, 2017).
3.3	​	Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on August 30, 2018).
3.4	​	Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on April 12, 2019).
3.5	​	Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on November 6, 2020).
3.6	​	Certificate of Amendment of Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed on November 6, 2020).
4.1		Form of Waiver Agreement, dated as of February 3, 2021, by and between the Company and the Holder(s) (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on February 4, 2021).
10.1		Capital on Demand™ Sales Agreement, dated March 11, 2021 between the Company and JonesTrading Institutional Services LLC (incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K, filed on March 11, 2021).
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

By:	/s/ Mina Sooch
	Mina Sooch
	Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ Amy Rabourn
	Amy Rabourn
	Vice President Finance
	(Principal Financial Officer)