Stockholders' Equity |
9 Months Ended | ||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||
| Stockholders' Equity [Abstract] | |||||||||||||||||||||
| Stockholders' Equity |
Lincoln Park
Purchase Agreement
On
August 10, 2023, the Company entered into a common stock purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”) for an equity line financing (the “Purchase Agreement”). The Purchase Agreement provides that, subject to
the terms and conditions set forth therein, the Company has the sole right, but not the obligation, to direct Lincoln Park to purchase up to $50
million of shares of the Company’s common stock from time to time over the 30-month term of the Purchase Agreement.
Concurrently with entering into the Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park (the “Registration Rights Agreement”), pursuant to which the Company agreed to register the resale
of the shares of the Company’s common stock that have been and may be issued to Lincoln Park under the Purchase Agreement pursuant to a registration statement. Upon the execution of the Purchase Agreement, the Company issued 246,792 shares of the Company’s common stock to Lincoln Park with a fair value of $1.0 million as consideration for its commitment to purchase shares of the Company’s common stock under the Purchase Agreement which was recorded as a component of
financing costs in the accompanying statements of comprehensive income (loss) during the three and nine month periods ended September 30, 2023. Lincoln Park has agreed not to cause or engage in any manner whatsoever in any direct or
indirect short selling or hedging of the Company’s common stock.
In addition to the commitment shares referenced above, a total of 800,000 shares of the Company’s common stock were sold under the Purchase Agreement for net proceeds through September 30, 2023 in the amount
of $3.1 million. Lastly, the Company incurred issuance costs of $0.2 million, consisting of investor expense reimbursement and legal costs, during the three- and nine-months periods ended September 30, 2023 which were recorded
as a component of financing costs in the accompanying statements of comprehensive income (loss) during the three and nine month periods ended September 30, 2023. No shares of the Company’s common stock were sold under the Purchase Agreement prior to the third quarter of 2023.
Under
the Purchase Agreement on any business day selected by the Company, the Company may direct Lincoln Park to purchase up to 50,000
shares of its common stock on such business day (or the purchase date) (a “Regular Purchase”), provided that the closing sale price of the Company’s common stock on Nasdaq on the applicable purchase date is not below $0.25 and subject to other adjustments. A Regular Purchase may be increased to up to (i) 60,000 shares if the closing sale price of the Company’s common stock on Nasdaq is not below $5.00 on the applicable purchase date and (ii) 70,000
shares if the closing sale price of the Company’s common stock on Nasdaq is not below $7.50 on the applicable purchase
date. The Company may direct Lincoln Park to purchase shares in Regular Purchases as often as every business day. The purchase price per share for each such Regular Purchase will be equal to the lesser of:
In addition, the Company may also direct Lincoln Park, on any business
day on which the Company has submitted a Regular Purchase notice for the maximum amount allowed for such Regular Purchase, to purchase an additional amount of the Company’s common stock (an “Accelerated Purchase”) of up to the lesser
of:
The purchase price per share for each such Accelerated Purchase will
be equal to 96.5% of the lower of:
The Company may also direct Lincoln Park, on any business day on which
an Accelerated Purchase has been completed and all of the shares to be purchased thereunder have been delivered to Lincoln Park in accordance with the Purchase Agreement, to purchase an additional amount of the Company’s common stock
(an “Additional Accelerated Purchase”) as described in the Purchase Agreement.
The pricing and settlement provisions in the Purchase Agreement result in the recognition of a derivative liability
under the Purchase Agreement were accounted for as a derivative liability on a fair value basis under the provisions of ASC 815 - Derivatives and Hedging. A Monte Carlo simulation model was used to estimate future stock pricing and
purchase activity to determine the fair value of the derivative liability as of the August 10, 2023 commencement date and again as of September 30, 2023. As of August 10, 2023 and September 30, 2023, the inputs used to determine
fair value of the derivative liability included the Company’s Nasdaq closing stock price of $4.14 and $3.35 per share, respectively, a stock volatility rate of 82.5% and 87.5%., respectively, an expected term of 2.5 years and 2.4 years,
respectively, and a risk-free interest rate of 4.6% and 4.9%, respectively. Lastly, the fair value of
the derivative liability took into account future purchase decisions based on economic considerations and relevant stock issuance rules/limitations. The fair value change in the derivative liability was recorded in the fair value
change in derivative liability line item in the accompanying statements of comprehensive income (loss) during the three- and nine-month periods ended September 30, 2023.
At-The-Market Program
On February 4, 2021, Ocuphire filed a Form S-3 shelf registration under the Securities Act of 1933 which was declared effective by the SEC on February 12, 2021 (the “2021 Shelf”) under
which the Company may offer and sell, from time to time in its sole discretion, securities having an aggregate offering price of up to $125
million. In connection with the 2021 Shelf, on March 11, 2021, Ocuphire entered into a sales agreement with JonesTrading Institutional Services LLC (“JonesTrading”) under which the Company may offer and sell, from time to time at its
sole discretion, to or through JonesTrading, acting as agent and/or principal, shares of its common stock having an aggregate offering price of up to $40 million (the “2021 ATM”). During the three and nine months ended September 30, 2023, 577,555 shares of common stock were sold under the
2021 ATM for aggregate gross proceeds in the amount of $2.4 million before deducting issuance expenses, including the
placement agent’s fees, legal and accounting expenses, in the amount of $69,000.
During the three and nine months ended September 30, 2022, 634,509 and 1,848,980 shares
of common stock were sold under the 2021 ATM, respectively, for aggregate gross proceeds in the amount of $1.4 million and $4.4 million, respectively, before deducting issuance expenses, including the placement agent’s fees, legal and accounting expenses, in the
amount of $42,000 and $130,000,
respectively.
Registered Direct Offering
On June 4, 2021, the Company entered into a placement agency agreement with A.G.P./Alliance Global Partners (“AGP”). Pursuant to the terms of the placement agency agreement, AGP on June 8, 2021 sold an aggregate of
3,076,923 shares of the Company’s common stock and warrants to purchase 1,538,461 shares of the Company’s common stock (the “RDO Warrants”). The RDO Warrants are equity classified, have an exercise price of $6.09 per share, are exercisable from the initial issuance date of June 8, 2021, and will expire five years following the initial issuance date. As of September 30, 2023, 1,538,461
RDO Warrants were outstanding.
Pre-Merger Financing
On June 17,
2020, Ocuphire, Rexahn and certain investors entered into a Securities Purchase Agreement, which was amended and restated in its entirety on June 29, 2020 (as amended and restated, the “Securities Purchase Agreement”). Pursuant to the
Securities Purchase Agreement, the investors invested a total of $21.15 million in cash, including $300,000 invested by five
directors of Ocuphire Pharma, Inc., prior to the Merger and one director of Rexahn upon closing of the Merger (the “Pre-Merger
Financing”). The Pre-Merger Financing also included the issuance of Series A Warrants and Series B Warrants discussed further below.
Series A Warrants
The Series A
Warrants were issued on November 19, 2020 at an initial exercise price of $4.4795 per share, were immediately exercisable upon
issuance and have a term of five years from the date of issuance. The Series A Warrants are exercisable for 5,665,838 shares of common stock in the aggregate (without giving effect to any limitation on exercise contained therein) and were outstanding
as of September 30, 2023. The Series A Warrants were accounted for and classified as equity on the accompanying condensed balance sheets.
Series B Warrants
The Series B
Warrants had an exercise price of $0.0001, were exercisable upon issuance and would have expired on the day following the later
to occur of (i) the Reservation Date (as defined therein) or (ii) the date on which the investor’s Series B Warrants would have been exercised in full (without giving effect to any limitation on exercise contained therein). None of the Series B Warrants were outstanding as of September 30, 2023. During the nine months ended September 30, 2023, 17,869 warrants were exercised for shares of common stock. The Series B Warrants were accounted for and classified as equity on the
accompanying condensed balance sheets while outstanding.
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