Ocuphire Pharma, Inc. (NASDAQ:OCUP) is a clinical-stage ophthalmic biopharmaceutical company focused on developing novel therapies for the treatment of patients with retinal and refractive eye disorders. The company's lead product candidate, APX3330, is a first-in-class small-molecule inhibitor of Ref-1 (reduction oxidation effector factor-1 protein) that is being developed as an oral treatment for diabetic retinopathy (DR).

Business Overview

Ocuphire's primary focus is on advancing APX3330 for the treatment of diabetic retinopathy, a leading cause of blindness in working-age adults. DR affects approximately 10 million of the 38 million Americans with diabetes and is projected to impact over 14 million Americans by 2050. The disease is classified as either non-proliferative diabetic retinopathy (NPDR), the early stage with mild or non-existent symptoms, or proliferative diabetic retinopathy (PDR), the more advanced stage associated with vision loss. Approximately 80% of DR patients have NPDR that will progress to PDR if left untreated.

Despite the risk of visual impairment, over 90% of NPDR patients currently receive no treatment beyond observation by their eye care specialist. This is due to the treatment burden of the frequent eye injections required with currently approved DR therapies. APX3330, as an oral tablet, has the potential to be an early, non-invasive treatment option for the 8 million NPDR patients in the US.

APX3330 is a novel small-molecule inhibitor of Ref-1, a protein that plays a crucial role in DNA repair and reduction-oxidation activities. By inhibiting Ref-1, APX3330 uniquely targets three different but related disease processes implicated in a host of vision-threatening retinal diseases: inflammation, angiogenesis and oxidative stress. This differentiated mechanism of action sets APX3330 apart from current anti-VEGF injectable therapies.

In January 2023, Ocuphire reported top-line results from the ZETA-1 Phase 2 trial of APX3330 in 103 DR patients. While the study did not meet its primary endpoint of a ≥2-step improvement in the Early Treatment Diabetic Retinopathy Study (ETDRS) diabetic retinopathy severity scale (DRSS) in the study eye at week 24, the drug demonstrated efficacy in slowing or preventing DR progression on a binocular DRSS person scale, which the FDA has agreed is an approvable registration endpoint. APX3330 also exhibited a favorable safety and tolerability profile in the trial.

Ocuphire recently held a successful End-of-Phase 2 meeting with the FDA, during which the agency agreed on the registration endpoint supporting the advancement of APX3330 into Phase 3 clinical trials. The company plans to submit a Special Protocol Assessment (SPA) to the FDA to align on the clinical trial protocol and statistical analysis plan for the Phase 3 program.

In addition to APX3330, Ocuphire has in-licensed two second-generation Ref-1 inhibitor analogs, APX2009 and APX2014, which could potentially be beneficial in treating other retinal diseases such as age-related macular degeneration and geographic atrophy.

Financials

For the full year 2022, Ocuphire reported annual revenue of $45.0 million, driven primarily by a one-time $35 million upfront payment and a $10 million milestone payment received under the Nyxol License Agreement. The company reported a net loss of $10.0 million and generated negative operating and free cash flow of $1.1 million each for the year.

In the first quarter of 2023, Ocuphire generated $5.4 million in revenue, largely from the reimbursement of research and development expenses related to the Nyxol program. The company reported a net loss of $4.9 million and negative operating and free cash flow of $1.6 million for the quarter.

As of March 31, 2023, Ocuphire had $40.8 million in cash and cash equivalents, providing runway to fund operations for at least the next 12 months. The company has a clean balance sheet with no debt.

Ocuphire's financial performance has been impacted by its ongoing investment in the clinical development of APX3330 and Nyxol. Research and development expenses totaled $13.8 million in 2022 and $4.3 million in Q1 2023, reflecting the company's commitment to advancing its pipeline. General and administrative expenses were $8.7 million in 2022 and $2.4 million in Q1 2023, primarily driven by personnel-related costs and professional fees.

Outlook

Looking ahead, Ocuphire is focused on executing a successful Phase 3 program for APX3330 in diabetic retinopathy and continuing the development of Nyxol in presbyopia and dim light vision disturbances (DLD) in partnership with Viatris.

The company plans to submit a Special Protocol Assessment (SPA) to the FDA in the coming months to align on the design of the APX3330 Phase 3 trials. Ocuphire expects to initiate the Phase 3 program for APX3330 in the second half of 2023, with topline data anticipated in 2025.

For the Nyxol program, Viatris is expected to continue the Phase 3 development in presbyopia and DLD in the first half of 2024, following FDA agreement on the trial protocols. Ocuphire is eligible to receive potential milestone payments of up to $130 million and tiered royalties on Nyxol product sales under the license agreement.

Key upcoming milestones for Ocuphire include: Submission of SPA for APX3330 Phase 3 trials (H2 2023), Initiation of APX3330 Phase 3 program (H2 2023), Continued Phase 3 development of Nyxol in presbyopia and DLD (H1 2024), Topline data from APX3330 Phase 3 trials (2025).

Risks and Challenges

While Ocuphire's pipeline holds significant promise, the company faces several risks and challenges common to clinical-stage biopharmaceutical companies. These include the inherent uncertainty of drug development, the potential for delays or failures in clinical trials, regulatory approval hurdles, and competition from other therapies.

The company's reliance on partnerships, such as the Nyxol agreement with Viatris, also introduces execution risks related to the successful development and commercialization of its products. Additionally, Ocuphire's limited operating history and history of losses may make it challenging to secure additional financing to fund its operations.

Conclusion

Ocuphire Pharma is a compelling investment opportunity in the ophthalmology space, with a differentiated oral therapy for diabetic retinopathy in late-stage development and a promising partnered program in refractive eye disorders. The company's lead candidate, APX3330, has demonstrated the potential to slow the progression of diabetic retinopathy, addressing a significant unmet need for a non-invasive treatment option.

With a successful End-of-Phase 2 meeting with the FDA and plans to initiate Phase 3 trials for APX3330 in the second half of 2023, Ocuphire is well-positioned to advance its lead program and deliver value for shareholders. The company's robust pipeline, strong financial position, and experienced management team further bolster its investment appeal. As Ocuphire continues to execute on its strategic priorities, the stock warrants close attention from investors seeking exposure to the ophthalmology space.