Ocuphire Pharma(OCUP) - 2019 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents Rexahn Pharmaceuticals' unaudited condensed financial statements, providing a snapshot of its financial position and performance Financial Statements (Unaudited) This section details Rexahn Pharmaceuticals' unaudited condensed financial statements, showing a net loss of $4.8 million for the first six months of 2019 Condensed Balance Sheet%20Condensed%20Balance%20Sheet%20as%20of%20June%2030,%202019%20and%20December%2031,%202018) This section presents the company's condensed balance sheet, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Balance Sheet Summary | Balance Sheet Items | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $7,310,049 | $8,744,301 | | Total Current Assets | $17,293,210 | $15,899,668 | | Total Assets | $17,677,234 | $16,042,926 | | Total Current Liabilities | $3,551,200 | $3,152,550 | | Total Liabilities | $4,054,128 | $5,480,036 | | Total Stockholders' Equity | $13,623,106 | $10,562,890 | Condensed Statement of Operations%20Condensed%20Statement%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030,%202019%20and%202018) This section outlines the company's condensed statement of operations, reporting revenues, expenses, and net loss for the specified periods Statement of Operations Summary (Six Months Ended June 30) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Revenues | $0 | $0 | | General and administrative | $3,035,538 | $3,396,170 | | Research and development | $3,890,631 | $7,491,126 | | Loss from Operations | ($6,926,169) | ($10,887,296) | | Net Loss | ($4,807,280) | ($5,913,141) | | Net loss per share, basic and diluted | ($1.23) | ($2.24) | - The company reported no revenue for the three and six-month periods ended June 30, 2019 and 2018, with both General & Administrative and Research & Development expenses decreasing in 2019 compared to 2018, leading to a smaller net loss[8] Condensed Statement of Comprehensive Loss%20Condensed%20Statement%20of%20Comprehensive%20Loss%20for%20the%20three%20and%20six%20months%20ended%20June%2030,%202019%20and%202018) This section presents the condensed statement of comprehensive loss, including net loss and other comprehensive income/loss components Comprehensive Loss Summary (Six Months Ended June 30) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Net Loss | ($4,807,280) | ($5,913,141) | | Unrealized gain (loss) on available-for-sale securities | $25,015 | ($8,069) | | Comprehensive Loss | ($4,782,265) | ($5,921,210) | Condensed Statement of Stockholders' Equity%20Condensed%20Statement%20of%20Stockholders'%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030,%202019%20and%202018) This section details changes in stockholders' equity, reflecting net loss, stock issuances, and other equity transactions - Total stockholders' equity increased from $10.6 million to $13.6 million at June 30, 2019, primarily due to the issuance of common stock and units providing net proceeds of approximately $7.6 million, offsetting the net loss for the period[12] Condensed Statement of Cash Flows%20Condensed%20Statement%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030,%202019%20and%202018) This section provides the condensed statement of cash flows, categorizing cash movements from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($6,186,631) | ($10,051,386) | | Net Cash (Used In) Provided by Investing Activities | ($2,901,449) | $6,246,507 | | Net Cash Provided by Financing Activities | $7,653,828 | $0 | | Net Decrease in Cash and Cash Equivalents | ($1,434,252) | ($3,804,879) | | Cash and Cash Equivalents - end of period | $7,310,049 | $5,094,275 | Notes to the Condensed Financial Statements%20Notes%20to%20the%20Condensed%20Financial%20Statements) This section provides explanatory notes to the condensed financial statements, offering additional details on accounting policies and significant transactions - The company, a biopharmaceutical firm focused on cancer treatments, reported an accumulated deficit of $159.5 million as of June 30, 2019, and believes its current cash will be sufficient for at least the next 12 months[14] - In February 2019, a collaboration and license agreement with BioSense Global LLC for RX-3117 included a $3.0 million upfront payment and potential milestones up to $226 million, with $1.5 million of the upfront payment received as of June 30, 2019[28][33] - The company executed a 1-for-12 reverse stock split on April 12, 2019, and in January 2019, closed a public offering raising gross proceeds of approximately $8.6 million[44][45] - The fair value of liability-classified warrants decreased significantly from $2.3 million to $366,732, resulting in an unrealized gain of $1.9 million for the six-month period[62][72] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, and clinical pipeline, highlighting reduced R&D expenses and future capital needs Overview This section provides an overview of Rexahn's business, focusing on its clinical-stage oncology pipeline and key product candidates - Rexahn is a clinical-stage biopharmaceutical company focused on next-generation cancer therapies, with two product candidates, RX-3117 and RX-5902, in Phase 2 clinical development[78] - RX-3117 is in a Phase 2a trial for metastatic pancreatic cancer, showing a 23% overall response rate and a median progression-free survival of approximately 5.4 months[78] - RX-5902 was in a Phase 2a trial for triple-negative breast cancer, but enrollment was ceased in December 2018 to explore a potential combination trial with Merck's KEYTRUDA[81] Results of Operations This section analyzes the company's operating results, comparing expenses and financial performance for the current and prior periods Comparison of Operating Expenses (Three Months Ended June 30) | Expense Category | 2019 | 2018 | Change (%) | | :--- | :--- | :--- | :--- | | General and Administrative | $1,340,000 | $1,569,000 | -14.6% | | Research and Development | $1,648,000 | $3,433,000 | -52.0% | Comparison of Operating Expenses (Six Months Ended June 30) | Expense Category | 2019 | 2018 | Change (%) | | :--- | :--- | :--- | :--- | | General and Administrative | $3,036,000 | $3,396,000 | -10.6% | | Research and Development | $3,891,000 | $7,491,000 | -48.1% | - The decrease in R&D expenses was primarily due to lower drug manufacturing costs and reduced clinical trial costs following study completion and trial cessation[87] - The company recorded significant unrealized gains of $1.9 million on the fair value of warrants for the first six months of 2019, mainly due to a decrease in its stock price[91] Research and Development Projects This section details the allocation of research and development expenses across various clinical candidates and projects R&D Expenses by Project (Six Months Ended June 30) | Clinical Candidate | 2019 | 2018 | | :--- | :--- | :--- | | RX-3117 | $2,136,400 | $3,596,900 | | RX-5902 | $530,200 | $1,864,000 | | RX-0201 | $171,100 | $317,000 | | Preclinical, Personnel and Overhead | $1,052,931 | $1,713,226 | | Total R&D Expenses | $3,890,631 | $7,491,126 | Liquidity and Capital Resources This section discusses the company's cash position, funding requirements, and strategies for securing future capital - The company has incurred negative cash flow from operations since inception and anticipates continued substantial spending on R&D and clinical trials[101] - Management believes existing cash, cash equivalents, and marketable securities are sufficient to cover cash flow requirements for at least the next 12 months[101] - Additional capital will be needed for drug candidate development, planned through equity, debt offerings, or strategic partnerships[101] Quantitative and Qualitative Disclosures About Market Risk The company, as a smaller reporting entity, is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Rexahn Pharmaceuticals, Inc. is not required to provide quantitative and qualitative disclosures about market risk[108] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[109] - There were no changes in the company's internal control over financial reporting during the quarter that materially affected these controls[110] PART II OTHER INFORMATION This section provides additional information not covered in the financial statements, including risk factors and a list of exhibits Risk Factors This section outlines significant risks, including potential delisting from the Nasdaq Capital Market, which could impact stock value and capital raising - A key risk is the potential delisting of its common stock from the Nasdaq Capital Market if the company fails to comply with continued listing standards[113] - Delisting could lead to adverse effects on financing, reduced liquidity and value of common stock, loss of investor confidence, and potential breaches of warrant holder commitments[113] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, agreements, and required certifications - Key exhibits filed with this report include: - Certificates of Amendment to the Certificate of Incorporation - The Collaboration and License Agreement with BioSense Global LLC, dated February 25, 2019 - CEO certifications pursuant to Sarbanes-Oxley Act rules - Financial statements formatted in XBRL[115] Signatures This section contains the required signatures, confirming the report's submission by authorized company officers - The report was signed on August 7, 2019, by Douglas J. Swirsky, serving as the Chief Executive Officer and President and also as the principal executive, financial, and accounting officer[117]