Ocuphire Pharma(OCUP) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents Opus Genetics, Inc.'s unaudited condensed consolidated financial statements, including the balance sheets, statements of comprehensive loss, changes in Series A Preferred Stock and stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, mergers, commitments, financings, and other financial disclosures for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets Data | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $32,429 | $30,321 | | Total current assets | $38,439 | $36,610 | | Total assets | $38,665 | $36,862 | | Warrant liabilities | $11,800 | $— | | Total current liabilities | $20,192 | $11,295 | | Total liabilities | $21,192 | $11,295 | | Total stockholders' equity | $17,473 | $6,724 | - Total assets increased by $1.8 million from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents[12] - Warrant liabilities significantly increased to $11.8 million as of June 30, 2025, from zero at December 31, 2024, due to new financings[12] - Total stockholders' equity increased by $10.7 million, from $6.7 million to $17.5 million, reflecting recent financing activities[12] Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss Data | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | License and collaborations revenue | $2,882 | $1,112 | $7,252 | $2,823 | | General and administrative | $5,766 | $3,354 | $12,112 | $8,024 | | Research and development | $6,022 | $6,086 | $13,975 | $10,835 | | Total operating expenses | $11,788 | $9,440 | $26,087 | $18,859 | | Loss from operations | $(8,906) | $(8,328) | $(18,835) | $(16,036) | | Fair value change in warrant and other derivative liabilities | $917 | $— | $3,722 | $— | | Financing costs | $35 | $— | $(1,337) | $— | | Net loss | $(7,420) | $(7,765) | $(15,614) | $(14,871) | | Basic and diluted net loss per share | $(0.12) | $(0.30) | $(0.32) | $(0.59) | - License and collaborations revenue increased significantly by 159% for the three months ended June 30, 2025, and by 157% for the six months ended June 30, 2025, compared to the prior year periods[14] - Net loss decreased for the three months ended June 30, 2025, to $7.4 million from $7.8 million in the prior year, but increased for the six months ended June 30, 2025, to $15.6 million from $14.9 million[14] Condensed Consolidated Statements of Changes in Series A Preferred Stock and Stockholders' Equity Condensed Consolidated Statements of Changes in Series A Preferred Stock and Stockholders' Equity Data | Metric (in thousands, except shares) | Balance at Dec 31, 2024 | Issuance of common stock and warrants | Stock-based compensation | Conversion of preferred stock | Net and comprehensive loss | Balance at June 30, 2025 | | :----------------------------------- | :---------------------- | :------------------------------------ | :----------------------- | :---------------------------- | :------------------------- | :----------------------- | | Series A Preferred Stock (Shares) | 14,145.374 | — | — | (14,145.374) | — | — | | Series A Preferred Stock (Amount) | $18,843 | — | — | $(18,843) | — | $— | | Common Stock (Shares) | 31,574,657 | 13,749,160 | 186,919 | 14,145,374 | — | 59,908,055 | | Common Stock (Amount) | $3 | $2 | — | $1 | — | $6 | | Additional Paid-In Capital | $145,719 | $6,387 | $913 | $18,842 | — | $172,079 | | Accumulated Deficit | $(138,998) | — | — | — | $(15,614) | $(154,612) | | Total Stockholders' Equity | $6,724 | $6,389 | $913 | $18,843 | $(15,614) | $17,473 | - All Series A Preferred Stock was converted into 14,145,374 shares of common stock by June 30, 2025, following stockholder approval[17] - Additional paid-in capital increased significantly due to common stock and warrant issuances, and the conversion of preferred stock[16][17] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Data | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(19,263) | $(13,008) | | Net cash used in investing activities | $— | $— | | Net cash provided by financing activities | $21,371 | $3,916 | | Net increase (decrease) in cash and cash equivalents | $2,108 | $(9,092) | | Cash and cash equivalents at end of period | $32,429 | $41,409 | - Net cash used in operating activities increased to $19.3 million for the six months ended June 30, 2025, from $13.0 million in the prior year, primarily due to a higher net loss and changes in operating assets and liabilities[20][260] - Net cash provided by financing activities significantly increased to $21.4 million for the six months ended June 30, 2025, from $3.9 million in the prior year, driven by proceeds from the March 2025 Offering and Private Placement, and the RDF Agreement[20][263] - The company experienced a net increase in cash and cash equivalents of $2.1 million for the six months ended June 30, 2025, compared to a net decrease of $9.1 million in the same period last year[20] Notes to Condensed Consolidated Financial Statements 1. Company Description and Summary of Significant Accounting Policies This section outlines Opus Genetics, Inc.'s business as a clinical-stage biopharmaceutical company focusing on gene therapies for inherited retinal diseases (IRDs) and small molecule therapies for other ophthalmic disorders. It details the Opus Acquisition, key pipeline assets like OPGx-LCA5 and OPGx-BEST1, and the Viatris License Agreement for RYZUMVI. The section also covers critical accounting policies, including liquidity, revenue recognition, fair value measurements, and recent accounting pronouncements - Opus Genetics, Inc. is a clinical-stage biopharmaceutical company developing gene therapies for inherited retinal diseases (IRDs) and small molecule therapies for other ophthalmic disorders[22] - The company acquired Private Opus on October 22, 2024, expanding its pipeline to include adeno-associated virus (AAV) based gene therapies for Leber congenital amaurosis (LCA), bestrophinopathy, and retinitis pigmentosa[23][24] - RYZUMVI® (Phentolamine Ophthalmic Solution 0.75%) was approved by the FDA in September 2023 for pharmacologically induced mydriasis and commercially launched in April 2024 under the Viatris License Agreement[25] - As of June 30, 2025, the Company had $32.4 million in cash and cash equivalents, which management believes will be sufficient to fund operations for at least twelve months[32] Fair Value of Financial Instruments (in thousands) | Description | As of June 30, 2025 (Total) | As of December 31, 2024 (Total) | | :---------------------- | :-------------------------- | :------------------------------ | | Short-term investments | $— | $2 | | Warrant liabilities | $11,800 | $— | | Other derivative liabilities | $— | $2 | 2. Mergers This section details the Opus Acquisition, where the Company acquired Private Opus, issuing common and Series A Preferred Stock as consideration. It also references the 2020 Rexahn Merger and the associated Contingent Value Rights (CVR) Agreement, which entitles former Rexahn stockholders to future payments based on certain licensing revenues - On October 22, 2024, the Company acquired Private Opus for a total consideration of $25.8 million, issuing 5,237,063 shares of common stock and 14,145.374 shares of Series A Preferred Stock[65] - The Series A Preferred Stock was convertible into 1,000 shares of common stock per share, with stockholder approval obtained on April 30, 2025[65] - The Rexahn Merger in November 2020 included a Contingent Value Rights (CVR) Agreement, entitling former Rexahn stockholders to 75-90% of certain future payments from BioSense, HaiChang, and other IP deals over a fifteen-year term[66][67][69] 3. Commitments and Contingencies This section outlines various contractual obligations, including sublicense and license agreements for intellectual property related to drug development, and facility and equipment leases. Most future milestone obligations under these agreements were not deemed probable as of June 30, 2025, and thus no liabilities were recorded - The Company has several license agreements with potential development, regulatory, and commercial milestone payments, including with Apexian Pharmaceuticals (up to $31 million), University of Pennsylvania (up to $2.6 million for LCA5/RDH12, de minimis for LCA5 VR), and Iveric (up to $111.7 million for BEST1/RHO, and $76.4 million to Penn/UF for BEST1, $93.5 million to Penn/UF for RHO)[70][71][72][74][75][76] - As of June 30, 2025, none of the future obligations under these license agreements were considered probable, and therefore no liabilities were recorded[71][72][74][76][77] - The Company relocated its headquarters to Durham, NC, on January 1, 2025, with a monthly base rent of approximately $3,000, amended to $5,500 in July 2025 to include laboratory space, expiring September 30, 2025[78][177] - Rent expense for all leases amounted to $65,000 and $9,000 for the three months ended June 30, 2025 and 2024, respectively, and $132,000 and $18,000 for the six months ended June 30, 2025 and 2024, respectively[82] 4. Supplemental Balance Sheet Information This section provides a detailed breakdown of the Company's accrued expenses and other liabilities as of June 30, 2025, and December 31, 2024 Accrued Expenses and Other Liabilities Data | Accrued Expenses and Other Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Payroll | $1,327 | $1,481 | | Professional services | $3,233 | $1,608 | | Research and development services and supplies | $2,102 | $4,452 | | Other | $265 | $606 | | Total | $6,927 | $8,147 | - Accrued professional services significantly increased from $1.6 million to $3.2 million, while research and development services and supplies decreased from $4.5 million to $2.1 million[84] 5. Related Party Transactions This section details transactions with related parties, including consulting agreements with Dr. Pepose and Dr. Jean Bennett, subscription agreements with Dr. George Magrath and Cam Gallagher, and strategic partnerships with Foundation Fighting Blindness (FFB) and its Retinal Degeneration Fund (RDF) for funding and collaboration on gene therapy programs - Consulting expenses for Dr. Pepose amounted to $119,000 and $238,000 for the three and six months ended June 30, 2025, respectively[88] - Dr. Jean Bennett received a restricted stock unit award of 100,000 shares vesting on October 22, 2025, for consulting services[90] - The Company entered into a 2025 Letter Agreement with FFB and JCHR to collaborate on studies for RDH12 or BEST1 genes, with an obligation to make two payments of $300,000 each, one paid by June 30, 2025, and the other due by January 31, 2027[92][93] - A funding agreement (RDF Agreement) with Foundation Fighting Blindness Retinal Degeneration Fund provides up to $2.0 million in nondilutive funding for the MERTK Program, with $1.0 million disbursed in June 2025[94] 6. Series A Preferred Stock This section details the authorization and issuance of Series A Preferred Stock in connection with the Opus Acquisition and its subsequent conversion into common stock following stockholder approval - 14,145.374 shares of Series A Preferred Stock were issued upon the close of the Opus Acquisition on October 22, 2024[98] - On May 5, 2025, all Series A Preferred Stock was converted into 14,145,374 shares of common stock after stockholder approval at the 2025 Annual Meeting[98] 7. Financings This section details the Company's financing activities, including the March 2025 public offering and private placement, the termination of the Lincoln Park Purchase Agreement, the At-The-Market (ATM) program, and prior Registered Direct Offering (RDO) and Pre-Merger Financing, along with the associated warrant activities - The March 2025 Offering and Private Placement generated combined gross proceeds of approximately $21.5 million, before deducting $1.8 million in underwriting discounts and offering expenses[102] - The March 2025 Warrants and March 2025 Private Placement Warrants were classified as warrant liabilities due to certain volatility provisions and had a fair value of $14.7 million and $0.8 million, respectively, at issuance[103][106][108][109] - The Lincoln Park Purchase Agreement, which allowed the Company to sell up to $50 million of common stock, was terminated on April 3, 2025, having generated $5.2 million in net proceeds through June 30, 2025[112][115][117] - A new At-The-Market (ATM) equity issuance program was established on January 13, 2025, with Leerink Partners LLC, replacing the prior program. Since inception, ATM programs have sold 8,006,791 shares for $26.8 million in gross proceeds[118][119] Warrant Activity Summary | Metric | Outstanding and exercisable at Dec 31, 2024 | Issued | Exercised | Forfeited/Cancelled | Outstanding and exercisable at June 30, 2025 | | :----------------------------------- | :------------------------------------------ | :---------- | :-------- | :------------------ | :------------------------------------------- | | Warrants (Number) | 7,204,299 | 22,229,102 | — | — | 29,433,401 | | Weighted Average Exercise Price | $4.82 | $0.96 | $— | $— | $1.91 | | Weighted Average Remaining Term (Years) | 1.00 | 5.00 | — | — | 3.70 | 8. Stock-based Compensation This section details the Company's stock-based compensation expenses, equity incentive plans (Inducement Plan, 2020 Plan, 2018 Plan), and activity related to stock options and restricted stock units (RSUs), including grants, exercises, forfeitures, and vesting schedules Stock-Based Compensation Expense (in thousands) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | General and administrative | $614 | $526 | $1,243 | $1,301 | | Research and development | $282 | $280 | $566 | $490 | | Total stock-based compensation | $896 | $806 | $1,809 | $1,791 | - The 2020 Equity Incentive Plan's evergreen provision added 1,578,733 shares on January 1, 2025[131] Stock Option Activity Summary | Metric | Number of Options (June 30, 2025) | Weighted Average Exercise Price | | :----------------------------------- | :-------------------------------- | :------------------------------ | | Outstanding at December 31, 2024 | 5,073,736 | $2.68 | | Granted | 2,059,829 | $0.94 | | Exercised | (5,000) | $0.90 | | Forfeited/Cancelled | (473,630) | $1.92 | | Outstanding at June 30, 2025 | 6,654,935 | $2.19 | Restricted Stock Unit (RSU) Activity Summary | Metric | Number of Shares (June 30, 2025) | | :------------------------------- | :------------------------------- | | Non-vested at December 31, 2024 | 1,393,230 | | Granted | 1,455,361 | | Forfeited | (231,788) | | Vested | (381,534) | | Non-vested at June 30, 2025 | 2,235,269 | - Unrecognized stock-based compensation cost was $6.1 million as of June 30, 2025, expected to be recognized over a weighted average period of 1.7 years[145] 9. Apexian Sublicense Agreement This section details the Apexian Sublicense Agreement, under which the Company obtained exclusive worldwide rights for a Ref-1 Inhibitor program, including APX3330. It outlines potential milestone payments for development, regulatory, and sales achievements, as well as single-digit royalty payments on net sales, none of which were deemed probable as of June 30, 2025 - The Apexian Sublicense Agreement grants exclusive worldwide rights for a Ref-1 Inhibitor program, with APX3330 as the lead compound for ophthalmic and diabetes mellitus conditions[146] - Potential milestone payments include up to $11 million for development and regulatory milestones and up to $20 million for sales milestones, plus single-digit percentage royalties on net sales[147] - As of June 30, 2025, none of the milestone or royalty payments under this agreement were triggered or deemed probable[148] 10. License and Collaboration Agreements This section details key license and collaboration agreements, including the Viatris License Agreement for PS Products (RYZUMVI), the BioSense License and Assignment Agreement for RX-3117, the termination of the Processa License Agreement, and the SBIR Grant Agreement for the RHO product. It outlines revenue recognition, milestone payments, and royalties associated with these agreements - The Viatris License Agreement granted Viatris exclusive rights to develop and commercialize PS Products (including RYZUMVI) worldwide, except for certain Asian countries. The Company received a $35 million upfront payment and a $10 million milestone payment for FDA approval of PS[149][152] - Revenue recognized under the Viatris License Agreement was $2.9 million and $7.3 million for the three and six months ended June 30, 2025, respectively, primarily from reimbursement of R&D services and, to a lesser extent, royalty payments[155] - The BioSense License and Assignment Agreement offers potential milestone payments up to $84.5 million and tiered royalties for RX-3117 in the BioSense Territory, but no payments were probable as of June 30, 2025[162] - The Processa License Agreement for RX-3117 was terminated by Processa, effective October 25, 2025, meaning no future payments will be received after this date[166] - The Company recognized $173,000 and $197,000 of revenue from an SBIR grant for the RHO product development for the three and six months ended June 30, 2025, respectively[168] 11. Net Loss per Share This section explains the calculation of basic and diluted net loss per share, noting that potential common shares from Series A and RDO warrants, stock options, and RSUs were excluded from diluted EPS calculations as their inclusion would be anti-dilutive due to the net loss - Basic and diluted net loss per share are computed by dividing net loss by the weighted average number of common shares outstanding, with common stock equivalents considered if dilutive[169] Anti-Dilutive Potential Common Shares | Potential Common Shares | June 30, 2025 | June 30, 2024 | | :---------------------- | :------------ | :------------ | | Series A and RDO warrants | 29,433,401 | 7,204,299 | | Stock options | 6,654,935 | 4,962,489 | | RSUs | 2,235,269 | 1,167,090 | - No incremental common stock equivalents were included in diluted loss per share calculations because their effect would have been anti-dilutive given the reported net loss[169] 12. Income Taxes This section states that the Company's effective tax rate was zero percent for the periods presented due to a full valuation allowance on net deferred income tax assets. It also notes the Company is assessing the impact of the recently signed One Big, Beautiful Bill (OBBB) on tax policy, particularly regarding R&D expense capitalization - The effective tax rate for the three and six months ended June 30, 2025 and 2024, was zero percent[171] - A full valuation allowance has been established on the Company's net deferred income tax assets due to uncertainty of future taxable income[171] - The Company is currently assessing the impact of the One Big, Beautiful Bill (OBBB), signed July 4, 2025, which makes significant changes to tax policy, especially regarding the capitalization of research and development expenses[171] 13. Deferred Compensation Plan This section details the Company's 401(k) plan, which became effective October 1, 2021, and includes matching contributions for eligible employees - The Company offers a 401(k) plan to all employees, with matching contributions of 100% on the first 3% deferred and an additional 50% on the next 2% deferred[173] 401(k) Matching Contributions (in thousands) | Period | Contributions | | :------------------------- | :------------ | | 3 Months Ended June 30, 2025 | $34 | | 3 Months Ended June 30, 2024 | $43 | | 6 Months Ended June 30, 2025 | $111 | | 6 Months Ended June 30, 2024 | $101 | 14. Subsequent Events This section reports events occurring after June 30, 2025, including a funding and license agreement for the RDH12 Program and an amendment to the headquarters lease to include laboratory space - On July 22, 2025, the Company entered into the RDH12 Agreement with Eyes on the Future and RDH12 Fund for Sight, providing up to $1.6 million in funding for the RDH12 Program[174] - The RDH12 Agreement includes diligence obligations and a non-exclusive, global, royalty-free license to the Funding Parties if certain milestones are not met or a 'License Trigger Event' occurs[175] - On July 1, 2025, the headquarters lease was amended to include laboratory space, increasing the monthly base rent to approximately $5,500, with the lease expiring on September 30, 2025[177] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, including an overview of its business, pipeline, recent developments, and strategic outlook. It analyzes revenue and expense trends, liquidity, capital resources, and critical accounting policies, offering insights into past performance and future expectations Overview Opus Genetics, Inc. is a clinical-stage biopharmaceutical company focused on gene therapies for inherited retinal diseases and small molecule therapies for ophthalmic disorders. Following the Opus Acquisition, the pipeline expanded to include AAV-based gene therapies like OPGx-LCA5 (Phase 1/2 ongoing, RMAT designation) and OPGx-BEST1 (IND submission expected H2 2025), alongside RYZUMVI (FDA approved, commercialized) and APX3330 (seeking strategic partner). The Company's strategic outlook involves advancing its pipeline, exploring out-licensing, and financing operations through equity, debt, and collaborations - Opus Genetics is a clinical-stage biopharmaceutical company developing gene therapies for inherited retinal diseases (IRDs) and small molecule therapies for other ophthalmic disorders[186] - The Opus Acquisition on October 22, 2024, expanded the pipeline to include AAV-based gene therapies for Leber congenital amaurosis (LCA), bestrophinopathy, and retinitis pigmentosa[188] - OPGx-LCA5, the most advanced gene therapy, is in an ongoing Phase 1/2 clinical trial, showing visual improvement in adult patients and initial positive data in pediatric patients, and has received Regenerative Medicine Advanced Therapy (RMAT) designation from the FDA[189][199] - OPGx-BEST1 is a gene therapy candidate for Best Disease, with an Investigational New Drug (IND) application and Phase 1/2 trial expected in the second half of 2025[190] - RYZUMVI (Phentolamine Ophthalmic Solution 0.75%) was FDA-approved in September 2023 and commercialized in April 2024. The Company plans to file a Supplemental New Drug Application (sNDA) for presbyopia in H2 2025[192][193] - APX3330, a small molecule inhibitor for diabetic retinopathy, is seeking a strategic partner due to capital requirements and developmental timelines[194] - Net loss was $7.4 million and $15.6 million for the three and six months ended June 30, 2025, respectively, with an accumulated deficit of $154.6 million as of June 30, 2025[204] Financial Operations Overview This section details the Company's financial operations, categorizing revenue primarily from license and collaborations (Viatris License Agreement) and expenses into general and administrative (personnel, legal, business development) and research and development (clinical trials, manufacturing, license fees). It also covers fair value changes in warrant liabilities, financing costs, other income (interest, grants), and income tax provisions - License and collaborations revenue is primarily derived from the Viatris License Agreement, including a one-time payment, milestone payment, and reimbursement for R&D services, with RYZUMVI royalties also contributing[207] - General and administrative expenses include personnel costs, insurance, legal fees, business development, and professional services[211] - Research and development expenses cover clinical trials, nonclinical studies, regulatory activities, manufacturing, and license fees. R&D expenses for PS are fully reimbursed by Viatris[212][213] - Fair value changes in warrant and other derivative liabilities primarily relate to the March 2025 Warrants and Private Placement Warrants[215] - Financing costs consist of issuance costs attributed to the March 2025 Warrants and March 2025 Private Placement Warrants[216] - Other income, net, includes interest from cash, gains/losses from equity investments, and grant reimbursements[217] Results of Operations Comparison of Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, license and collaborations revenue increased significantly due to higher PS R&D services. General and administrative expenses rose due to public company costs, legal fees, and payroll. Research and development expenses saw a slight decrease, with lower manufacturing and consulting costs offset by higher clinical, toxicology, and payroll expenses. The period also saw a fair value change benefit in warrant liabilities and financing costs Comparison of Three Months Ended June 30, 2025 and 2024 Data | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | License and collaborations revenue | $2,882 | $1,112 | $1,770 | | General and administrative | $5,766 | $3,354 | $2,412 | | Research and development | $6,022 | $6,086 | $(64) | | Net loss | $(7,420) | $(7,765) | $345 | - License and collaborations revenue increased by $1.8 million, or 159%, primarily due to increased PS research and development services[220] - General and administrative expenses increased by $2.4 million, or 72%, mainly due to public company costs, legal fees, patent costs, and payroll[221] - Research and development expenses decreased slightly by $0.1 million, as lower manufacturing and consulting costs were largely offset by higher clinical, toxicology, and payroll-related costs[222] - A fair value change in warrant and other derivative liabilities resulted in a $0.9 million benefit for the three months ended June 30, 2025, compared to zero in the prior year[223] Comparison of Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, license and collaborations revenue significantly increased due to higher PS R&D services. General and administrative expenses rose due to public company, legal, and patent-related costs. Research and development expenses increased, driven by higher clinical and toxicology costs for PS and IRD programs, and payroll, partially offset by decreased APX3330-related expenses. The period also saw a substantial fair value change benefit in warrant liabilities and financing costs Comparison of Six Months Ended June 30, 2025 and 2024 Data | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | License and collaborations revenue | $7,252 | $2,823 | $4,429 | | General and administrative | $12,112 | $8,024 | $4,088 | | Research and development | $13,975 | $10,835 | $3,140 | | Net loss | $(15,614) | $(14,871) | $(743) | - License and collaborations revenue increased by $4.4 million, or 157%, primarily due to increased PS research and development services[227] - General and administrative expenses increased by $4.1 million, or 51%, mainly due to public company costs, legal support, patent fees, and professional services[228] - Research and development expenses increased by $3.1 million, or 29%, driven by higher clinical costs for PS trials and IRD programs, toxicology costs, and payroll, partially offset by decreased APX3330-related expenses[229] - A fair value change in warrant and other derivative liabilities resulted in a $3.7 million benefit for the six months ended June 30, 2025, compared to zero in the prior year[230] - Financing costs of $1.3 million were incurred for the six months ended June 30, 2025, primarily due to issuance costs for the March 2025 Warrants and Private Placement Warrants[231] Liquidity and Capital Resources This section details the Company's liquidity position, historical funding sources, and future capital requirements. As of June 30, 2025, the Company had $32.4 million in cash and cash equivalents, expected to fund operations for at least twelve months. Recent financings include the March 2025 Offering and Private Placement ($21.5 million gross proceeds) and $1.0 million from the RDF Agreement. The Lincoln Park Purchase Agreement was terminated. The Company anticipates needing additional capital through equity, debt, or collaborations to fund its increasing R&D expenses and achieve profitability - As of June 30, 2025, the Company had $32.4 million in cash and cash equivalents, which is believed to be sufficient to fund operations for at least twelve months[233] - Historical funding sources include $89.7 million from equity offerings, $8.5 million from convertible notes, $35.0 million upfront payment and $10.0 million milestone payment from the Viatris License Agreement, and $1.0 million from the RDF Agreement[234] - The March 2025 Offering and Private Placement generated approximately $21.5 million in combined gross proceeds, before deducting underwriting discounts and offering expenses[237] - The Lincoln Park Purchase Agreement, which provided for up to $50 million in equity line financing, was terminated on April 3, 2025, having generated $5.2 million in net proceeds[246][269] - The At-The-Market (ATM) program has sold 8,006,791 shares of common stock since its inception, generating $26.8 million in gross proceeds through June 30, 2025[247][268] - Future capital requirements are expected to increase due to ongoing clinical trials, nonclinical studies, and development of new product candidates. The Company expects to finance these needs through equity, debt, or collaborations, which may result in stockholder dilution or restrictive covenants[209][270][271] Critical Accounting Policies and Estimates This section highlights the Company's critical accounting policies that require significant management estimates and judgments, specifically focusing on license and collaborations revenue recognition under ASC 606 and the accounting for income tax assets and liabilities, including the full valuation allowance on net deferred tax assets - License and collaborations revenue is recognized in accordance with ASC 606, requiring allocation of transaction price to performance obligations based on estimated stand-alone selling prices using a discounted cash flow approach and probability assessments[293] - A full valuation allowance has been provided on the Company's net deferred tax assets due to the uncertainty of future taxable income and other factors impacting their realizability[294] Recent Accounting Pronouncements This section refers to Note 1 for a discussion of recently issued accounting pronouncements, including ASU 2023-07 on Segment Reporting and ASU 2023-09 on Income Taxes, and their impact on the Company's financial statements - The Company adopted ASU 2023-07 (Segment Reporting) on January 1, 2024, with no material impact on consolidated financial statements[63] - ASU 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024, and is expected to augment income tax disclosures related to rate reconciliation and jurisdictional detail[64] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that quantitative and qualitative disclosures about market risk are not applicable for smaller reporting companies - Quantitative and Qualitative Disclosures About Market Risk are not applicable for smaller reporting companies[296] Item 4. Controls and Procedures This section confirms that the Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025. It also states that there were no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2025[300] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting[301] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section states that the Company is not currently a party to any legal proceedings that are likely to materially affect its business or financial results, though it acknowledges that litigation can have an adverse impact - The Company is not currently a party to any legal proceedings that are likely to materially affect its business or financial results[303] Item 1A. Risk Factors This section updates the Company's risk factors, primarily highlighting the risk of potential delisting from the Nasdaq Capital Market if it fails to comply with the Minimum Bid Price Requirement, and the potential adverse effects of such an event or a reverse stock split - The Company's common stock has recently traded below the Nasdaq Minimum Bid Price Requirement of $1.00 per share, posing a risk of delisting if compliance is not regained[305] - Potential delisting could lead to decreased liquidity, increased volatility, damage to reputation, and negatively impact the ability to raise capital[307] - The Company may consider a reverse stock split to regain compliance, which could also negatively affect the stock price[306][307] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - None[308] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities to report for the period - None[309] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company - Not applicable to the Company[310] Item 5. Other Information This section reports that none of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter ended June 30, 2025[311] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including funding and license agreements, and certifications - Key exhibits include the Funding Agreement with Foundation Fighting Blindness Retinal Degeneration Fund (Exhibit 10.1) and the Funding and License Agreement with Eyes on the Future and RDH12 Fund for Sight (Exhibit 10.2)[312] - Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are also included (Exhibits 31.1, 31.2, 32.1)[312] SIGNATURES This section contains the authorized signatures of Opus Genetics, Inc.'s Chief Executive Officer and Head of Financial Quality Assurance, affirming the filing of the report - The report is duly signed by George Magrath, Chief Executive Officer and Director, and Amy Rabourn, Head of Financial Quality Assurance, on August 13, 2025[318][319]