Ocuphire Pharma(OCUP) - 2019 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements (Unaudited) The company reduced its nine-month net loss to $6.8 million and held $13.9 million in cash while exploring strategic alternatives Condensed Balance Sheet%20Condensed%20Balance%20Sheet) Total assets slightly decreased to $15.0 million while a reduction in warrant liabilities helped increase stockholders' equity to $11.8 million Condensed Balance Sheet Summary (in thousands) | Balance Sheet Item | Sep 30, 2019 | Dec 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $7,932 | $8,744 | ($812) | | Total Current Assets | $14,636 | $15,900 | ($1,264) | | Total Assets | $14,981 | $16,043 | ($1,062) | | Total Current Liabilities | $3,001 | $3,153 | ($152) | | Warrant Liabilities | $124 | $2,308 | ($2,184) | | Total Liabilities | $3,226 | $5,480 | ($2,254) | | Total Stockholders' Equity | $11,755 | $10,563 | $1,192 | Condensed Statement of Operations%20Condensed%20Statement%20of%20Operations) The company reported no revenue and narrowed its nine-month net loss to $6.8 million due to reduced operating expenses and warrant gains Condensed Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $0 | $0 | $0 | $0 | | General and administrative | $1,149 | $1,796 | $4,185 | $5,192 | | Research and development | $1,131 | $2,888 | $5,022 | $10,379 | | Loss from Operations | ($2,281) | ($4,684) | ($9,207) | ($15,571) | | Unrealized gain (loss) on warrants | $243 | ($710) | $2,184 | $3,752 | | Net Loss | ($1,959) | ($5,339) | ($6,767) | ($11,252) | | Net loss per share | ($0.49) | ($2.02) | ($1.72) | ($4.26) | Condensed Statement of Stockholders' Equity%20Condensed%20Statement%20of%20Stockholders'%20Equity) Stockholders' equity rose to $11.8 million, driven by $7.6 million in net proceeds from stock issuance that offset the period's net loss - In January 2019, the company issued 895,834 shares of common stock and units, raising net proceeds of $7,553,828[13] - The accumulated deficit grew to $161.5 million as of September 30, 2019, from $154.7 million at the beginning of the year, reflecting the ongoing net losses[13] Condensed Statement of Cash Flows%20Condensed%20Statement%20of%20Cash%20Flows) Net cash used in operations was $8.6 million, offset by $7.7 million from financing, resulting in a period-end cash balance of $7.9 million Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($8,565) | ($14,218) | | Net Cash Provided by Investing Activities | $99 | $9,911 | | Net Cash Provided by Financing Activities | $7,654 | $0 | | Net Decrease in Cash | ($812) | ($4,307) | | Cash and Cash Equivalents - end of period | $7,932 | $4,592 | Notes to the Condensed Financial Statements%20Notes%20to%20the%20Condensed%20Financial%20Statements) Notes detail the company's financial condition, strategic review, key agreements, and management's belief in its 12-month operational funding - The company is a biopharmaceutical firm developing treatments for cancer and had an accumulated deficit of $161,453,752 as of September 30, 2019[15] - In September 2019, the company began exploring strategic alternatives to enhance shareholder value[15] - Management believes its cash, cash equivalents, and marketable securities of approximately $13.9 million as of September 30, 2019, are sufficient to fund operations for at least the next 12 months[16] - A collaboration agreement with BioSense Global LLC for RX-3117 includes a $3.0 million upfront payment, of which $1.5 million was received and recorded as deferred revenue as of September 30, 2019[30][35] - On April 12, 2019, the company executed a 1-for-12 reverse stock split of its common stock[47] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its strategic review, significant reductions in operating expenses, and its assessment of having sufficient cash for the next year - The company is a clinical-stage biopharmaceutical company with two product candidates, RX-3117 and RX-5902, in Phase 2 clinical development[77] - In September 2019, the company began exploring strategic alternatives (e.g., merger, acquisition, asset sales) and reduced its headcount to five employees to conserve resources[80] - The company believes its cash, cash equivalents, and marketable securities of approximately $13.9 million as of September 30, 2019, will be sufficient to cover cash flow requirements for at least the next 12 months[94] Comparison of Operating Expenses (in thousands) | Expense Category | 9 Months 2019 | 9 Months 2018 | % Change | | :--- | :--- | :--- | :--- | | General and administrative | $4,185 | $5,192 | -19.4% | | Research and development | $5,022 | $10,379 | -51.6% | Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required as the company qualifies as a smaller reporting company - The company has indicated that this disclosure is not required[101] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of the end of the period[102] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[103] PART II OTHER INFORMATION Risk Factors Key risks include the uncertainty of the strategic review process and the potential for delisting from the Nasdaq Capital Market - The process of evaluating strategic alternatives may not lead to a definitive transaction, could distract management, and may adversely affect business operations and investor perception[106] - Failure to complete a strategic transaction could cause a decline in the stock price and harm the company's ability to access financial markets[106] - There is a risk of being delisted from the Nasdaq Capital Market for non-compliance with listing standards, which would negatively affect the stock's value, liquidity, and the company's ability to raise capital[107] Exhibits This section lists filed exhibits, including a collaboration agreement amendment, CEO certifications, and XBRL data files - Filed exhibits include Amendment No. 1 to the Collaboration and License Agreement with BioSense Global LLC, CEO certifications pursuant to Sarbanes-Oxley, and XBRL financial data[110] Signatures