Raised ~$21.5M in March Offering; $11.8M Warrants Liability Recorded
Filing Impact
Filing Sentiment
Form Type
10-Q
Opus Genetics, Inc. reported license and collaboration revenue of $2.882 million for the quarter and $7.252 million for the six months, up from $1.112 million and $2.823 million a year earlier. Operating expenses rose to $11.8 million in the quarter (research and development $6.0 million; general and administrative $5.8 million), producing a net loss of $7.42 million for the quarter and $15.614 million for the six-month period, with basic and diluted loss per share of $(0.12) and $(0.32), respectively.
The balance sheet shows $32.4 million in cash and cash equivalents and total assets of $38.7 million. Total liabilities were $21.2 million, including $11.8 million of warrant liabilities recorded in connection with March 2025 financings that produced combined gross proceeds of approximately $21.5 million. The Company had 59,908,055 shares outstanding as of the reported count and states its current cash is sufficient to fund planned expenditures for at least twelve months. The filing discloses sizeable potential milestone obligations under acquired licenses (including maximums of $111.7 million, $76.4 million and $93.5 million for certain agreements) that were not recorded because they were not deemed probable.
Positive
- Completed March 2025 financings generating combined gross proceeds of approximately $21.5 million.
- License and collaboration revenue growth: $2.882 million this quarter and $7.252 million for the six months, up year-over-year.
- Cash position of $32.4 million with management stating it is sufficient to fund planned expenditures for at least twelve months.
- Conversion of Series A preferred stock into common stock simplified the capital structure and removed the preferred liability.
Negative
- Continued operating losses and cash burn: net loss of $7.42 million for the quarter and $15.614 million for the six months; net cash used in operating activities $19.263 million for six months.
- Significant warrant liabilities: $11.8 million recorded related to March 2025 warrants, creating fair-value volatility and potential dilution.
- Large potential milestone obligations not recorded: agreements include maximum potential payments up to $111.7 million, $76.4 million and $93.5 million that could require significant future cash if they become probable.
- Substantial accumulated deficit: accumulated deficit of $(154.6) million on the balance sheet.
Insights
TL;DR: Financing extended runway but operating cash burn and warrant liability introduce near-term funding and dilution risks.
Opus generated meaningful license revenue growth year-over-year and closed March 2025 financings that materially improved liquidity, producing roughly $21.5 million of gross proceeds and leaving $32.4 million of cash at period end. However, operating cash used was $19.3 million for the six months, leading to continued net losses ($15.6 million YTD). The $11.8 million warrant liability reflects the economics of the March financings and creates mark-to-market volatility in earnings. On balance this is a mixed outcome: the financing addresses near-term funding but the company remains cash-consuming and exposed to potential dilution and fair-value volatility.
TL;DR: Conversion and financings simplify the capital structure but large unaccrued milestone caps and derivative liabilities are material governance and risk considerations.
The conversion of Series A preferred into common removed a preferred-line liability and increased common shares outstanding to nearly 60 million, which affects ownership and dilution dynamics. Multiple license and asset purchase agreements include aggregate potential milestone obligations (for example up to $111.7M, $76.4M and $93.5M) that remain unrecorded because achievement is not probable; these represent contingent strategic risks that could require substantial future cash or new financing. The recorded warrant liabilities and embedded derivatives from equity line agreements further complicate financial reporting and could amplify earnings volatility or lead to additional cash requirements if exercised or settled unfavorably.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
For the Quarterly Period Ended June 30, 2025
OR
For the transition period from to ________
Commission File Number: 001-34079
(Exact name of Registrant as specified in its charter)
|
|
|
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant’s telephone number, including area code: (984 ) 884-6030
N/A
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
||
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The
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of
“large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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Large accelerated filer
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☐ |
|
☒ |
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Accelerated filer
|
☐ |
Smaller reporting company
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Emerging growth company
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of outstanding shares of the registrant’s common stock as of August 10, 2025 was 59,908,055 .
OPUS GENETICS, INC.
FORM 10-Q
INDEX
|
|
|
Page
|
|
|
PART 1 – FINANCIAL INFORMATION
|
|
|
Item 1.
|
Financial Statements
|
3 |
|
|
Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024
|
3
|
|
|
Condensed Consolidated Statements of Comprehensive Loss for the three
and six months ended June 30, 2025 and 2024 (unaudited)
|
4 |
|
|
Condensed Consolidated Statements of Changes in Series A Preferred
Stock and Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024 (unaudited)
|
5
|
|
|
Condensed Consolidated Statements of Cash Flows for the six months ended June
30, 2025 and 2024 (unaudited)
|
6
|
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
7
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
31
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
51 |
|
Item 4.
|
Controls and Procedures
|
51 |
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|
|
|
PART II – OTHER INFORMATION
|
|
|
|
|
|
|
Item 1.
|
Legal Proceedings
|
52
|
|
Item 1A.
|
Risk Factors
|
52
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
53 |
|
Item 3.
|
Defaults Upon Senior Securities
|
53 |
|
Item 4.
|
Mine Safety Disclosures
|
53 |
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Item 5.
|
Other Information
|
53 |
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Item 6.
|
Exhibits
|
53 |
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SIGNATURES
|
54 |
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2
Index
PART I –
FINANCIAL INFORMATION
|
Item 1.
|
Financial Statements
|
Opus Genetics, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share amounts and par value)
|
As of
|
||||||||
|
June 30,
|
December 31,
|
|||||||
| 2025 | 2024 | |||||||
|
Assets
|
(Unaudited) |
|||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
| Accounts receivable |
||||||||
| Contract assets and unbilled receivables (Note 10) |
||||||||
|
Prepaids and other current assets
|
||||||||
|
Short-term investments
|
|
|
||||||
|
Total current assets
|
|
|
||||||
|
Property and equipment, net
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
Liabilities and stockholders’ equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
|
$
|
|
||||
|
Accrued expenses and other liabilities
|
|
|
||||||
| Warrant liabilities |
||||||||
| Total current liabilities |
||||||||
| Long term funding agreement, related party |
||||||||
|
Total liabilities
|
|
|
||||||
|
Commitments and contingencies (Note 3 and Note 9)
|
||||||||
|
Series A preferred stock, par value $
|
||||||||
|
Stockholders’ equity:
|
||||||||
|
Preferred stock, par value $
|
|
|
||||||
|
Common stock, par value $
|
|
|
||||||
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Additional paid-in capital
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|
||||||
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Accumulated deficit
|
(
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)
|
(
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)
|
||||
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Total stockholders’ equity
|
|
|
||||||
|
Total liabilities, series A preferred stock and stockholders’ equity
|
$
|
|
$
|
|
||||
See accompanying notes.
3
Index
Opus Genetics, Inc.
Condensed Consolidated Statements of
Comprehensive Loss
(in thousands, except share and per share amounts)
(Unaudited)
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
|
2025
|
2024
|
2025 | 2024 | |||||||||||||
| License and collaborations revenue |
$ | $ | $ | $ | ||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
General and administrative
|
|
|
||||||||||||||
|
Research and development
|
|
|
||||||||||||||
|
Total operating expenses
|
|
|
||||||||||||||
| Loss from operations |
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
| Fair value change in warrant and other derivative liabilities |
||||||||||||||||
| Financing costs |
( |
) | ||||||||||||||
|
Other income, net
|
|
|
||||||||||||||
|
Loss before income taxes
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
|
Benefit (provision) for income taxes
|
|
|
||||||||||||||
| Net loss |
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
| Other comprehensive loss, net of tax |
|
|||||||||||||||
| Comprehensive loss |
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
| Net loss per share: |
||||||||||||||||
|
Basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
|
Number of shares used in per share calculations:
|
||||||||||||||||
|
Basic and diluted
|
||||||||||||||||
See accompanying notes.
4
Index
Opus Genetics, Inc.
Condensed Consolidated
Statements of
Changes in
Series A Preferred Stock and Stockholders’ Equity
(in thousands, except share amounts)
(Unaudited)
| Series A Preferred Stock
|
Common Stock
|
Additional
Paid–In
|
Accumulated
|
Total
Stockholders’
|
||||||||||||||||||||||||
| Shares | Amount |
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
||||||||||||||||||||||
|
Balance at December 31, 2023
|
$ |
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||
|
Issuance of common stock in connection with the at-the-market program and purchase agreement
|
— | — | ||||||||||||||||||||||||||
| Issuance costs |
— | — | — | ( |
) | ( |
) | |||||||||||||||||||||
|
Stock-based compensation
|
— | — |
|
|
|
|
|
|||||||||||||||||||||
|
Share repurchases for the payment of employee taxes
|
— | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
|
Net and comprehensive loss
|
— | — |
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Balance at March 31, 2024
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||
|
Issuance of common stock in connection with the at-the-market program and purchase agreement
|
— | — | ||||||||||||||||||||||||||
| Issuance costs | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||
|
Stock-based compensation
|
— | — |
|
|
|
|
|
|||||||||||||||||||||
|
Net and comprehensive loss
|
— | — |
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Balance at June 30, 2024
|
$ |
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||
|
Balance at December 31, 2024
|
$ |
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||||
|
Issuance of common stock and pre-funded warrants in connection with the March 2025 offering and private placement
|
— | — | ||||||||||||||||||||||||||
|
Issuance of common stock in connection with at-the-market program
|
— | — | ||||||||||||||||||||||||||
| Issuance costs | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||
|
Stock-based compensation
|
— |
|
|
|
|
|
||||||||||||||||||||||
|
Share repurchases for the payment of employee taxes
|
— | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
|
Exercise of stock options
|
— | — | ||||||||||||||||||||||||||
|
Net and comprehensive loss
|
— | — |
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Balance at March 31, 2025
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||
|
Conversion of preferred stock
|
( |
) | ( |
) | ||||||||||||||||||||||||
|
Stock-based compensation
|
— | — |
|
|
|
|||||||||||||||||||||||
|
Issuance cost, net credit
|
— | — |
—
|
|
|
|
|
|||||||||||||||||||||
|
Net and comprehensive loss
|
— | — |
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
|
Balance at June 30, 2025
|
$ |
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
|
See accompanying notes.
5
Index
Opus Genetics, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
For the Six
Months Ended
June 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Operating activities
|
||||||||
|
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
|
Stock-based compensation
|
|
|
||||||
|
Depreciation
|
|
|
||||||
|
Fair value change in warrant and other derivative liabilities
|
(
|
)
|
|
|||||
|
Unrealized loss from short-term investments
|
|
|
||||||
|
Warrant financing costs
|
|
|
||||||
|
Change in assets and liabilities:
|
||||||||
|
Accounts receivable
|
|
(
|
)
|
|||||
|
Contract assets and unbilled receivables
|
|
|
||||||
|
Prepaids and other current assets
|
(
|
)
|
(
|
)
|
||||
|
Accounts payable
|
(
|
)
|
(
|
)
|
||||
|
Accrued expenses and other liabilities
|
(
|
)
|
|
|||||
|
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
|
Investing activities
|
||||||||
|
Net cash used in investing activities
|
|
|
||||||
|
Financing activities
|
||||||||
|
Proceeds from issuance of common stock and pre-funded warrants in connection with the March 2025 offering and March
2025 private placement
|
|
|
||||||
|
Proceeds from issuance of warrants in connection with the March 2025 offering and March 2025 private placement
|
|
|
||||||
|
Proceeds from issuance of common stock in connection with the at-the-market program and purchase agreement
|
|
|
||||||
| Proceeds from funding agreement, related party |
||||||||
|
Issuance costs
|
(
|
)
|
(
|
)
|
||||
|
Exercise of stock options
|
|
|
||||||
|
Share repurchases for the payment of employee taxes
|
(
|
)
|
(
|
)
|
||||
|
Net cash provided by financing activities
|
|
|
||||||
|
Net increase (decrease) in cash and cash equivalents
|
|
(
|
)
|
|||||
|
Cash and cash equivalents at beginning of period
|
|
|
||||||
|
Cash and cash equivalents at end of period
|
$
|
|
$
|
|
||||
|
Supplemental disclosure of cash flow information:
|
||||||||
|
Cash paid for income taxes
|
$
|
|
$
|
|
||||
|
Cash paid for interest
|
$
|
|
$
|
|
||||
|
Supplemental non-cash financing transactions:
|
||||||||
|
Conversion of series A preferred stock into common stock
|
$ |
$ |
||||||
|
Change in unpaid issuance costs
|
$
|
|
$
|
|
||||
See accompanying notes.
6
Index
Notes to Condensed Consolidated Financial Statements
| 1. |
Company Description and Summary of Significant Accounting Policies
|
Nature of Business
Opus Genetics, Inc. (the “Company” or “Opus”), a Delaware corporation formerly known as Ocuphire Pharma, Inc. (the “Company” or
“Opus”), is a clinical-stage biopharmaceutical company developing gene therapies for the treatment of inherited retinal diseases (“IRDs”) and small molecule therapies for other ophthalmic disorders. The Company’s headquarters is
located in Durham, North Carolina.
On October 22, 2024, the Company acquired a private corporation then operating under the name of “Opus Genetics,
Inc.” (“Private Opus”) pursuant to the terms of an Agreement and Plan of Merger, dated as of October 22, 2024 (such agreement, the “Merger Agreement” and the transaction consummated via the Merger Agreement, the “Opus
Acquisition”), by and among the Company, Private Opus, and certain merger subsidiaries party thereto.
The Company’s pipeline includes assets from the adeno-associated virus (“AAV”) based gene therapy portfolio of Private Opus that
address mutations in genes that cause different forms of Leber congenital amaurosis (“LCA”), bestrophinopathy, and retinitis pigmentosa. Apart from gene therapies, the Company’s pipeline also includes Phentolamine Ophthalmic
Solution 0.75%, a non-selective alpha-1 and alpha-2 adrenergic antagonist to reduce pupil size as well as APX3330, a novel small-molecule inhibitor of Ref-1 designed to slow the progression of non-proliferative diabetic
retinopathy. The Company’s most advanced gene therapy program is designed to address mutations in the LCA5 gene (“LCA5”), which encodes the lebercilin protein. More specifically, we are developing OPGx-LCA5 to treat
LCA5-associated inherited retinal disease (“IRD”), an early-onset retinal degeneration, and an open-label, dose-escalation Phase 1/2 clinical trial is ongoing.OPGx-BEST1 is another gene therapy candidate in the Company’s
portfolio. This asset is being developed for the treatment of IRDs associated with mutations in the BEST1 gene (“Best Disease”), which can lead to legal blindness.
In November 2022, the Company entered into a license and collaboration agreement (the
“Viatris License Agreement”) with FamyGen Life Sciences, Inc. (acquired by and now known as Viatris, Inc. (“Viatris”)), pursuant to which it granted Viatris an exclusive license to develop, manufacture, import, export and
commercialize its refractive product candidate Phentolamine Ophthalmic Solution 0.75% (initially known as Nyxol) (“PS”). PS is a once-daily eye drop formulation of phentolamine mesylate designed to reduce pupil diameter and
improve visual acuity. PS was approved by the FDA for the treatment for pharmacologically induced mydriasis produced by adrenergic agonists (e.g., phenylephrine) or parasympatholytic (e.g., tropicamide) agents, or a combination
thereof under the brand name RYZUMVI® in September 2023 and was launched commercially in April 2024. For decreased vision under mesopic (low) light
conditions following keratorefractive surgery, we received FDA agreement under Special Protocol Assessment (“SPA”) for LYNX-2, a Phase 3 Trial of PS.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission (“SEC”) and include the accounts of the Company’s subsidiary, Private Opus. All intercompany transactions and
balances have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have
been condensed or omitted pursuant to such rules and regulations. The Company’s fiscal year begins on January 1 and ends on December 31.
The December 31, 2024 condensed consolidated balance sheet was derived from audited financial
statements and may not include all disclosures required by GAAP; however, the Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying condensed consolidated financial statements
should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2025.
7
Index
Notes to Condensed Consolidated Financial
Statements
In the opinion of management, all adjustments, consisting of only normal recurring adjustments
that are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, have been made. The results of operations for the interim periods are not necessarily indicative of the operating
results for the full fiscal year or any future periods.
The derivative liability line item reflected on the December 31, 2024 consolidated balance
sheet in the prior year was reclassified to the accrued expenses and other liabilities line item in the amount of $2,000
Liquidity
The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a
going concern. From its inception, the Company has devoted substantially all of its efforts to drug development and conducting clinical trials.
As of June 30, 2025, the Company had $32.4 million in cash and cash equivalents. The Company believes its current available cash and cash equivalents will be sufficient to fund the Company’s planned expenditures
and meet its obligations for at least twelve months from the date of issuance of these consolidated financial statements.
In the future, the Company may need to raise additional funds until it is able to generate sufficient revenues to fund its
development activities. The Company’s future operating activities, coupled with its plans to raise capital or issue debt financing, may provide additional liquidity in the future, however these actions are not solely within the
control of the Company and the Company is unable to predict the outcome of these actions to generate the liquidity ultimately required.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Segment Information
Operating segments are components of an enterprise for which separate financial
information is available and are evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is its Chief Executive
Officer. The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating
segment, which is the business of development of products related to vision performance and health. Accordingly, the condensed consolidated financial statements and
accompanying notes contained herein include the measure of profit or loss, categories of expenses and other financial information that is evaluated by the Company’s
Chief Executive Officer.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of deposit to be cash equivalents.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. Management follows approved policies established by the Company’s Board of Directors (the “Board”) to reduce
credit risk associated with the Company’s cash deposit and investment accounts. Pursuant to these policies, the Company limits its exposure through the kind, quality and concentration of its investments. The Company’s cash and cash equivalents are held or managed by four financial institutions in the United States. As
of June 30, 2025, the Company had cash equivalents of $31.7 million that were not eligible for coverage by Federal Deposit
Insurance Corporation. These balances are invested in funds whose assets consist almost entirely of securities
issued by the U.S. Treasury or guaranteed by the U.S. government.
8
Index
Notes to Condensed Consolidated Financial
Statements
Short-term Investments
The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and
records them on a settlement date basis. The Company’s short-term investments are comprised of equity securities and are classified as trading, which in accordance with the fair value hierarchy described below are recorded at fair value
using Level l inputs on the balance sheets. Subsequent changes in fair values are recorded in other income, net on the consolidated statements of comprehensive loss. The Company classifies investments available to fund current
operations as current assets on its consolidated balance sheets. The Company did no t recognize any impairments on its
investments to date through June 30, 2025.
Revenue Recognition
The Company follows the provisions of Accounting Standards Codification (“ASC”) 606, Revenue
from Contracts with Customers (“ASC 606”). The guidance provides a five-step model to determine how revenue is recognized. The Company has entered into license agreements which have
revenue recognition implications (See Note 10 – License and Collaboration Agreements).
In determining the appropriate amount of revenue to be recognized, the Company performs the following steps: (i) identification
of the contracts with a customer; (ii) determination of the performance obligations in the contract; (iii) measurement of the transaction price, including potential constraints on variable consideration; (iv) allocation of the
transaction price to the performance obligations based on estimated stand-alone selling prices; and (v) recognition of revenue when (or as) the Company satisfies a performance obligation.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. Performance obligations may include license rights,
development and other services. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under
the arrangement. If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates.
Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method.
As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the
stand-alone selling price of each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines,
reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. The Company allocates the total transaction price to each performance obligation based on the relative standalone selling
prices of the promised goods or service underlying each performance obligation.
Licenses of intellectual property and research and development services: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues
from non-refundable, up-front fees allocated to the license when the license is transferred to the customer, and the customer can use and benefit from the license. For licenses that are bundled with other obligations, such as
research and development services, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and,
if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. For research and
development services that are distinct from a license transfer obligation, the Company determines whether the services are satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress
for purposes of recognizing revenue from such services. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
Milestone payments: At the
inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most
likely amount method. If it is probable that a significant revenue reversal will not occur, the value of the associated milestone (such as a regulatory submission) is included in the transaction price. Milestone payments that are
not within the control of the Company, such as approvals from regulators, are not considered probable of being achieved until such contingency occurs (such as receipt of those approvals).
9
Index
Notes to Condensed Consolidated
Financial Statements
Royalties: For arrangements that
include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (a) when the
related sales occur, or (b) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Contract Assets and Unbilled Receivables
The Company recognizes contract assets and unbilled receivables when goods or services are transferred to the customer before
the customer pays or before reimbursement for payment is billed or due, excluding any amounts presented as an account receivable. The Company recorded contract assets and unbilled receivables in connection with a license and
collaboration agreement (See Note 10 – License and Collaboration Agreements).
Accounts Receivable and Allowances for Credit Losses
The Company records a provision for credit losses, when appropriate,
based on historical experience, current conditions and reasonable supportable forecasts. The Company estimates credit losses over the remaining expected life of an asset by, among other things, primarily using historical
experience and current economic conditions that could affect the collectability of the balances in the future. Account balances are charged off against the allowance when the Company believes that it is probable that the
receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. The Company has no t
incurred any bad debt expense to date and no
Warrant Liabilities
The Company issued warrants to purchase equity securities in connection with the March 2025 financings and are recorded under the
warrant liabilities line item in the accompany condensed consolidated balance sheets (See Note 7 – Financings). The Company accounts for these warrants as a liability at fair value when the number of shares is not fixed and
determinable. Additionally, issuance costs associated with the warrant liability are expensed as incurred and reflected as financing costs in the accompanying condensed consolidated statements of comprehensive loss. The Company
adjusts the liability for changes in fair value until the earlier of the exercise or expiration of the warrants for any period until such time. Any future change in fair value of the warrant liabilities, when outstanding, is
recognized in the consolidated statements of comprehensive loss under the fair value change in warrant and other derivative liabilities line item.
Other Derivative Liabilities
The Company evaluates all features contained in financing agreements to determine if
there are any embedded derivatives that require separation from the underlying agreement under ASC 815 – Derivatives and Hedging. An embedded derivative that requires separation is accounted
for as a separate liability from the host agreement. The separated embedded derivatives are accounted for separately on a fair market value basis. The Company records the fair value change of a separated embedded derivative when
they occur in the condensed consolidated statements of comprehensive loss under the fair value change warrant and other derivative liabilities line item. The Company determined that certain features under an equity line financing
collectively qualified as an embedded derivative (See Note 7 — Financings). The derivative was accounted for separately from the underlying equity line financing agreement while it was outstanding.
Fair Value Measurements
The Company follows accounting guidance that emphasizes that fair value is a market-based
measurement, not an entity-specific measurement. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”
Fair value measurements are defined on a three-level hierarchy:
10
Index
Notes to Condensed Consolidated Financial
Statements
| • |
Level 1 inputs: Unadjusted quoted prices for identical assets or liabilities in active markets;
|
| • |
Level 2 inputs: Quoted prices for similar assets and liabilities in active markets, quoted prices in
markets that are not active, or inputs which are observable, whether directly or indirectly, for substantially the full term of the asset or liability; and
|
| • |
Level 3 inputs: Unobservable inputs in which there is little or no market data available, which
requires management to develop its own assumptions in pricing the asset or liability.
|
As of June 30, 2025 and December 31, 2024, the fair values of cash and cash equivalents, accounts receivable, contract
assets and unbilled receivables, prepaid and other assets, accounts payable, deferred revenue and accrued expenses approximated their carrying values because of the short-term nature of these assets or liabilities. The fair value of the
short-term investments, while outstanding, were based on observable Level 1 inputs in the form of quoted market prices from a major stock exchange. The fair value of the liabilities associated with the equity line financing facility and
the March 2025 Warrants and March 2025 Private Placement Warrants (as defined below) are based on cash flow models discounted at current implied market rates representing expected returns by market participants for similar instruments and
are based on Level 3 inputs as well the Company’s underlying stock price and associated volatility, expected term and market interest rates (See Note 7 – Financings). There were no
The fair value of financial instruments measured
on a recurring basis is as follows (in thousands):
|
|
As of June 30, 2025
|
|||||||||||||||
|
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
|
Assets:
|
||||||||||||||||
|
Short-term investments
|
$
|
|
* |
$
|
|
* |
$
|
|
$
|
|
||||||
|
Total assets at fair value
|
$
|
|
* |
$
|
|
* |
$
|
|
$
|
|
||||||
|
Liabilities:
|
||||||||||||||||
|
Warrant liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
| Other derivative liabilities |
||||||||||||||||
|
Total liabilities at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
*
|
|
|
|
As of December 31, 2024
|
|||||||||||||||
|
Description
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
|
Assets:
|
||||||||||||||||
|
Short-term investments
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Total assets at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Liabilities:
|
||||||||||||||||
|
Other derivative liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Total liabilities at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
The following table provides a roll-forward of
short-term investments measured at fair value on a recurring basis using observable level 1 inputs for the six months ended June 30, 2025 and 2024 (in thousands):
|
Six Months Ended
June 30,
|
||||||||
|
|
2025
|
2024
|
||||||
|
Short-term investments
|
||||||||
|
Balance as of beginning of period
|
$
|
|
$
|
|
||||
|
Unrealized loss
|
(
|
)
|
(
|
)
|
||||
|
Balance as of end of period
|
$
|
|
* |
$
|
|
|||
|
*
|
De minimis value
|
11
Index
Notes to Condensed Consolidated
Financial Statements
The following table provides a
roll-forward of liabilities measured at fair value on a recurring basis using unobservable level 3 inputs for the six months ended June 30, 2025 and 2024 (in thousands):
|
Six Months Ended
June 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Warrant liabilities
|
||||||||
|
Balance as of beginning of period
|
$
|
|
$
|
|
||||
|
Issuance of March 2025 Warrants and March 2025 Private Placement Warrants
|
||||||||
|
Change in fair value
|
( |
) | ||||||
|
Balance as of end of period
|
$
|
|
$
|
|
||||
|
Six Months Ended
June 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Other derivative liabilities
|
||||||||
|
Balance as of beginning of period
|
$
|
|
$
|
|
||||
|
Change in fair value
|
( |
) | ||||||
|
Balance as of end of period
|
$
|
|
$
|
|
||||
There were no
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based
compensation costs, for personnel in functions not directly associated with research and development activities. Other significant costs include insurance coverage for directors and officers and other property and liability exposures,
legal fees relating to intellectual property and corporate matters, business development costs, professional fees for accounting and tax services, other services provided by business consultants, and legal settlements.
Research and Development
Research and development expenses consist of costs incurred in performing research and development activities, including
compensation, benefits and stock-based compensation costs for research and development employees and costs for consultants, costs associated with nonclinical studies and clinical trials, regulatory activities, manufacturing activities
to support clinical activities, license fees, nonlegal patent costs, fees paid to external service providers that conduct certain research and development, and an allocation of overhead expenses. Research
and development expenses include costs that are reimbursed under the Viatris License Agreement (See Note 10 – License and Collaboration Agreements).
Other Income, net
Other income, net includes interest earned from cash and cash equivalent investments, realized and unrealized gains (losses) from
equity investments, and reimbursements in connection with grants and other sources when they occur. In addition, this line item includes payments made by the Company
when they occur in connection with the Contingent Value Rights Agreement (the “CVR Agreement”) discussed further below with former shareholders of Rexahn
Pharmaceuticals, Inc. (“Rexahn”).
12
Index
Notes to Condensed Consolidated
Financial Statements
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with the provisions of the Financial Accounting Standards Board
(“FASB”) ASC 718, Compensation — Stock Compensation. Accordingly, compensation costs related to equity instruments granted are recognized at the grant date fair value. The Company records
forfeitures when they occur. Stock-based compensation arrangements to non-employees are accounted for in accordance with the applicable provisions of ASC 718.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07 - Segment Reporting
(Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements, primarily through disclosures of significant segment expenses. This ASU is effective for fiscal years
beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance must be applied retrospectively to all prior periods presented. The Company
adopted the guidance on January 1, 2024. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income
Tax Disclosures, which enhances income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance also includes certain other amendments to improve the effectiveness of
income tax disclosures. This ASU is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years and should be applied on a prospective basis, with retrospective application
permitted. The Company has determined that the adoption of this guidance will augment its income tax disclosures related mainly to categorical detail in the rate reconciliation and jurisdictional detail associated with income taxes
paid.
| 2. |
Mergers
|
Acquisition of Opus Genetics
As described in Note 1 – Company Description and Summary of Significant Accounting Policies on October 22, 2024, the Company completed the stock purchase of Private Opus. Under the terms of the Merger Agreement, at the closing of the Opus Acquisition, the Company issued to the security holders of Private Opus
Merger with Rexahn
On November 5, 2020, the Company completed a merger transaction with Rexahn (“Rexahn Merger”). In connection with the Rexahn Merger, the
Company, Shareholder Representatives Services LLC, as representative of the Rexahn stockholders prior to the Merger, and Olde Monmouth Stock Transfer Co., Inc., as the rights agent, entered into the CVR Agreement.
Pursuant to the terms of the Rexahn Merger and the CVR Agreement, Rexahn stockholders of record as of immediately prior to the effective time of the Rexahn Merger received one contingent value right (“CVR”) for each share of Rexahn common stock held.
Each CVR entitles such holders to
receive, for each calendar quarter (each, a “CVR Payment Period”) during the fifteen-year period after the closing (the “CVR
Term”), an amount equal to the following:
13
Index
Notes to Condensed Consolidated Financial
Statements
| • |
|
| • |
|
| • |
|
The CVRs are not transferable, except in certain limited circumstances, will not be
certificated or evidenced by any instrument, will not accrue interest and will not be registered with the SEC or listed for trading on any exchange. The CVR Agreement will continue in effect until the later of the end of the CVR Term and
the payment of all amounts payable thereunder. As of June 30, 2025, no payments subject to the CVR Agreement had been received beyond those previously reported in the second and
third quarters of calendar year 2021. In addition, no milestones had been accrued as there were no
|
3.
|
Commitments and Contingencies
|
Apexian Sublicense Agreement
On January 21, 2020, the Company entered into a sublicense agreement
with Apexian Pharmaceuticals, Inc., pursuant to which it obtained exclusive worldwide patent and other intellectual property rights. In exchange for the patent and other intellectual rights, the Company agreed to certain milestone
payments and royalty payments on future sales (See Note 9 – Apexian Sublicense Agreement). As of June 30, 2025, there was sufficient uncertainty with regard to any future cash milestone payments under the sublicense agreement that no liabilities were recorded related to the sublicense
agreement.
University of Pennsylvania
LCA5/RDH12 License Agreement
On June 15, 2022, Opus entered into an amended and restated license agreement (the “LCA5/RDH12 Agreement”) with the Trustees of the University of Pennsylvania
(“Penn”) pursuant to which it was granted an exclusive, royalty-bearing license to certain patents and a non-exclusive license to certain information relating to products directed towards treatment or correction of mutation of the
LCA5 or RDH12 genes. In return for these rights, the Company is obligated to make certain development, regulatory and commercial milestone payments up to a maximum potential aggregate amount of $2.6 million and royalty payments on future net sales of such products. Until the Company is required to pay royalties under the LCA5/RDH2
Agreement, the Company must pay a de minimis annual license maintenance fee to Penn. The Company is also obligated to make payments on any sublicense income, with such percentage depending on the stage of product development, which
there was no sublicense income for any of the periods presented. As of June 30, 2025, the Company determined that none of the future obligations under the agreement were probable and therefore no liabilities were recorded related to
the agreement.
Iveric Asset Purchase Agreement –
BEST1 and RHO Programs
On December 23, 2022, Opus entered into an asset purchase agreement with Iveric (the “Iveric Agreement”) pursuant to which the Company acquired certain assets,
including the BEST1 License (as defined below), relating to the BEST1 and RHO products. In return for these rights, the Company is obligated to make payments to Iveric upon the achievement of specified development and commercial
milestones, the maximum potential aggregate amount of such payments being $111.7 million. As of June 30, 2025, the Company determined that none of the future obligations under the
agreement were probable and therefore no liabilities were recorded related to the agreement.
14
Index
Notes to Condensed Consolidated Financial
Statements
Penn and University of Florida BEST1
License Agreement
On April 10, 2019, Iveric entered into an exclusive patent license agreement (as amended, the “BEST1 License”) with Penn and the University of Florida Research
Foundation (“UF”), which agreement was assigned to Opus under the terms of the Iveric Agreement. Under the BEST1 License, Opus received exclusive patent rights and non-exclusive knowhow and data rights with regard to products to
treat diseases associated with mutations in the BEST1 gene. In return for these rights, we are obligated to make payments to Penn upon the achievement of certain clinical, regulatory and commercial milestones, the maximum potential
aggregate amount of such payments being $76.4 million. The Company is also obligated to make royalty payments on future
net sales of licensed BEST1 products. Until the Company is required to pay royalties under the BEST1 License, the Company must pay a de minimis annual license maintenance fee to UF and Penn. The Company must also make payments on any
sublicense income, with such percentage depending on the stage of product development, which there was no sublicense income during any of the periods presented. In consideration for Penn and UF’s consent to the assignment of the BEST1
License to us under the Iveric Agreement, the Company will also pay Penn a percentage of each milestone payment that we are required to pay to Iveric under the Iveric Agreement. As of June 30, 2025, the Company determined that none of the future obligations under the agreement were probable
and therefore no liabilities were recorded related to the agreement.
LCA5 VR License
On March 2, 2023, Opus entered into a non-exclusive license agreement (the “LCA5 VR License”) with Penn pursuant to which it was granted a non-exclusive
license to certain patents and copyrights relating to testing visual function using simulated living situations in individuals with visual disorders, for Opus’ use in clinical trials for the evaluation of retinal disorder treatments
caused by LCA5 mutations. In return for these rights, the Company is obligated to make a de minimis payment to Penn for each use of a licensed product in a clinical trial. As of June 30, 2025 the liability related to use of the licensed product was de minimis.
Penn and UF RHO License Agreement
On June 6,
2018, Iveric entered into an exclusive patent license agreement (the “RHO License”) by and between Penn and UF pursuant to which the Company has exclusive patent rights and non-exclusive knowhow and data rights with regard to products
to treat rhodopsin-mediated diseases as a result of the Iveric Agreement as defined above. In return for these rights, the Company is obligated to make development and commercial milestone payments, the maximum potential aggregate
amount of such payments being $93.5 million and royalty payments on future sales of such products. As of June 30, 2025, the Company determined that none of the future obligations under the
agreement were probable and therefore no liabilities were recorded related to the agreement.
Massachusetts Eye and Ear
Infirmary License Agreement
On November
9, 2021, Opus entered into a license agreement (the “MEEI License”) with the Massachusetts Eye and Ear Infirmary (“MEEI”), granting an exclusive worldwide license of MEEI patents for use in the NMNAT1 program for all products and
processes including the treatment of retinal disease in humans, and a non-exclusive worldwide license to technological information. In return for these rights, the Company is obligated to make development milestone payments, the maximum
potential aggregate amount of such payments being $0.4 million and royalty payments on future sales of such products. As of
June 30, 2025, the Company determined that none of the future obligations under the
agreement were probable and therefore no liabilities were recorded related to the agreement.
Facility and Other Leases
On January 1, 2025, the Company relocated its headquarters to Durham, North Carolina. The monthly base rent for the new headquarters lease was approximately $3,000 prior to an amendment that occurred in July 2025 (See Note 14 - Subsequent Events). The new headquarter lease expires on September 30, 2025 as amended. The
monthly base rent for the previous headquarters lease was approximately $3,000 Both leases qualified for the short-term
lease exception under ASC 842, Leases.
15
Index
Notes to Condensed Consolidated Financial
Statements
The
Company also leases additional laboratory space on a month-to-month basis for an aggregate monthly rent of approximately $9,000 .
The Company, upon the Opus Acquisition, assumed a number of equipment leases (the “Equipment Leases”) that qualified for the short-term exception under ASC 842-20-25-2. The Equipment Leases had a monthly rent in the aggregate of
approximately $10,000 per month. The leases expired in July 2025 and are under re-negotiation.
The rent
expense associated with all leases amounted to $65,000 and $9,000 during the three months ended June 30, 2025 and 2024, respectively and $132,000 and $18,000 during the six months ended June 30, 2025 and
2024, respectively.
Other
In the ordinary course of business, from time to time, the Company may be subject to a broad range of claims and legal proceedings that
relate to contractual allegations, patent infringement and other claims. In addition, the Company from time to time may be potentially committed to reimburse third parties for costs incurred associated with business development related
transactions upon the achievement of certain milestones. The Company establishes accruals when applicable for matters and commitments for which it believes losses are probable and can be reasonably estimated. To date, no loss
contingency for such matters and potential commitments have been recorded. Although it is not possible to predict with certainty the outcome of these matters or potential commitments, the Company is of the opinion that the ultimate
resolution of these matters and potential commitments will not have a material adverse effect on its results of operations or financial position.
| 4. |
Supplemental Balance Sheet Information
|
Accrued Expenses and Other liabilities
Accrued expenses and other liabilities consist of the following (in thousands):
| As of |
||||||||
|
June 30,
|
December 31,
|
|||||||
|
2025
|
2024
|
|||||||
|
Payroll
|
|
|
$
|
|
||||
|
Professional services
|
|
|
||||||
|
Research and development services and supplies
|
||||||||
|
Other
|
|
|
||||||
|
Total
|
$
|
|
$
|
|
||||
| 5. |
Related Party Transactions
|
Consulting Agreements with Dr. Pepose
On April 8, 2022, the Company entered into a consulting agreement (as amended, the “2022 Pepose Consulting Agreement”) with Jay Pepose, M.D., a former director of the Company. The 2022 Pepose Consulting Agreement
originally provided for $10,000 a month in cash payments and a stock option grant for 50,000 options, of which 25 % vested on March 31, 2023, with the remainder vesting in equal monthly installments over 36 months. The 2022 Pepose Consulting Agreement was amended on September 19, 2022 to provide for vesting acceleration for stock-based awards in the event of a
change in control, and on December 1, 2022 to increase the cash payment to $25,000 per month and on January 1, 2024 to extend
the expiration to March 31, 2024 and to increase the retainer for March 2024 to $49,000 .
On April 11, 2024, the Company entered into another consulting agreement (the “2024
Pepose Consulting Agreement” and, together with the 2022 Pepose Consulting Agreement, the “Pepose Consulting Agreements”) with Dr. Pepose following the expiration of
the 2022 Pepose Consulting Agreement. Pursuant to the 2024 Pepose Consulting Agreement, Dr. Pepose is paid a monthly consulting fee of $39,583 .
Additionally, Dr. Pepose received an award of 32,000 RSUs, as well as stock options to purchase 48,000 shares of the Company’s common stock. The RSUs vested in 12 equal monthly installments that began on May 11, 2024 and concluded on April 11, 2025. The 2024 Pepose Consulting Agreement expired on April 11, 2025.
16
Index
Notes to Condensed Consolidated Financial
Statements
For the agreements with Dr. Pepose described above, the Company incurred related consulting expenses of $119,000 and $238,000 during the three and six months ended June 30, 2025, respectively; and, as of June 30, 2025 and December 31, 2024, $40,000
Subscription Agreements with Dr. George Magrath and Cam Gallagher
On March 21, 2025, the Company entered into a subscription agreement with each of Dr. George Magrath, the Company’s Chief Executive Officer, and Cam Gallagher, the chairman of the Board,
in connection with a private offering of our securities. For more information, see Note 7 – Financings.
Consulting Agreement with Dr. Jean Bennett
In connection with Dr. Jean Bennett’s appointment as a member of the Board, effective October 22, 2024, she and the Company entered into a consulting
agreement (the “Bennett Consulting Agreement”), pursuant to which Dr. Bennett will provide consulting services to the Company for a one-year
period. Pursuant to the Bennett Consulting Agreement, Dr. Bennett was granted a restricted stock unit award with respect to 100,000
shares of the Company’s Common Stock, which award is scheduled to vest on October 22, 2025, subject to her continued service with the Company through such date; provided that the award will vest in full if the Bennett Consulting
Agreement is terminated due to a breach of the Bennett Consulting Agreement by the Company or termination by the Company for cause events. The Company incurred zero
Letter Agreement and Strategic Partnership—FFB
On
August 25, 2022, Private Opus entered into a binding letter of agreement (“2022 Binding Letter Agreement”) with Foundation Fighting Blindness (“FFB”) and the Jaeb Center for Health Research (the “JCHR”) to collaborate on natural
history studies involving individuals with retinal dystrophies associated with mutations in multiple genes of interest. Under the terms of the 2022 Binding Letter Agreement, FFB and JCHR had the sole responsibility and authority to
design and conduct the study, with input from the Company. Subject to certain conditions, the 2022 Binding Letter Agreement required that the Company provide FFB with a total of $2,000,000 of funding to support the study, such amount being payable in an initial installment of $400,000 at the time of submission of the final study protocol to the Institutional Review Board of the JCHR and, subject to certain conditions, in four annual installments of $400,000
on the anniversaries of such submission. On May 27, 2025, the Company entered into a binding letter of agreement (“2025 Letter Agreement”) with FFB and the JCHR, which superseded and canceled the 2022 Binding Letter Agreement. As of June 30, 2025 a
total of $400,000 was paid by the Company under the 2022 Binding Letter Agreement and no more payments were due under the 2022 Binding Letter Agreement.
Under the 2025 Letter Agreement, the Company will collaborate with FFB and the JCHR on portions of a study involving individuals with retinal
dystrophies associated with mutations in the RDH12 or BEST1 genes (the “Study”). The term of this 2025 Letter Agreement ends on the date that is two months from the Study’s completion. FFB and the JCHR, as its designee, shall have the sole responsibility and authority to design and conduct the Study, with input from the Company. Under the
2025 Letter Agreement, the Company is obligated to make two payments to FFB: (1) $300,000 on or before June 30, 2025 and (2) $300,000 on or before January 31, 2027 upon receipt of semi-annual reports from FFB outlining the progress being made in the Study, including visit completion status and publication plans, and the
ability for the Company to provide ongoing comments and suggestions regarding possible changes to the Study. Such payments shall constitute the sole compensation paid to FFB in return for Company access to research materials and
datasets.
As of June 30, 2025, the Company paid $300,000
under the 2025 Letter Agreement which was recorded as research and development expense. As of June 30, 2025, the Company is required to fund one additional installment in the aggregate of $300,000 upon receipt of future semi-annual reports.
17
Index
Notes to Condensed Consolidated
Financial Statements
RDF Agreement
On June 13, 2025, the Company entered into a funding agreement (the “RDF Agreement”) with the Foundation Fighting Blindness Retinal Degeneration Fund
(“RDF”), whose sole member is FFB, a significant stockholder of the Company, relating to the Company’s program to develop gene therapies to treat patients impacted by retinitis pigmentosa caused by pathogenic variants in the Mer
proto-oncogene tyrosine kinase (MERTK) gene (the “MERTK Program”). The RDF Agreement provides for nondilutive funding by RDF of up to $2.0
million (the “Funding Payments”) to support the development of the MERTK Program, $1.0 million of which was disbursed
to the Company in June 2025 (the “Initial Funding Payment”) and up to $1.0 million of which may be disbursed to the
Company upon achievement of a specified development milestone subject to RDF’s receipt of eligible funds (the “Milestone Funding Payment”).
Under the RDF Agreement, the Company is subject to certain diligence obligations to develop and commercialize a product under the MERTK Program. If
the Company is unable to achieve certain milestones by certain dates, or otherwise fails to meet its diligence obligations, the Company will be obligated to collaborate with RDF to out-license or otherwise make applicable rights
available to a third party.
In addition, the Company will pay a milestone payment equal to the total amounts funded by RDF under the RDF Agreement upon the achievement of a
regulatory milestone. The Company will also make tiered royalty payments to RDF in low-to-mid single percentages until RDF has received aggregate royalty payments equal to 300 % of the amounts funded by RDF under the Agreement. In the event of a change of control of the Company or a sale or exclusive license of the MERTK
Program, RDF will have the option to require the Company to buy out RDF’s interest under the Agreement for an amount equal to 100 %
of the funds disbursed to the Company under the Agreement.
The Agreement may be terminated by either party for cause, including material breach or bankruptcy, subject to a cure period.
The RDF Agreement was
accounted for as debt under ASC 470, Debt. ASC 470 requires interest expense to be recorded under an effective interest rate method. Interest expense for the second quarter of 2025 was
de minimis.
| 6. |
Series A Preferred Stock
|
On October 22, 2024, the Company filed a Certificate of Designation of Preferences, Rights and
Limitations of the Series A Non-Voting Convertible Preferred Stock with the Secretary of State of the State of Delaware (the “Certificate of Designation”) in connection with the Opus Acquisition. The Certificate of Designation provides for
the authorization of 14,146 shares of Series A Preferred Stock, of which 14,145.374 Series A Preferred Stock were issued upon close of the Opus Acquisition. On April 30, 2025, the Company held its 2025 Annual Meeting of Stockholders. During the
2025 Annual Meeting, the Company’s stockholders voted to approve the conversion of each share of Series A Preferred Stock into 1,000
shares of common stock. Subsequently, on May 5, 2025, all shares of Series A Preferred Stock were converted into 14,145,374 shares
of common stock.
| 7. |
Financings
|
March 2025
Financings
On
March 21, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Craig-Hallum Capital Group, LLC, as the sole underwriter (the “Underwriter”). Pursuant to the Underwriting Agreement, the Company
agreed to issue and sell, in an underwritten public offering (the “March 2025 Offering”), 12,219,736 shares of common
stock and warrants to purchase up to 21,052,631 shares of common stock (the “March 2025 Warrants”). Each share of common
stock was sold together with one March 2025 Warrant to purchase one share of common stock, at a price to the public of $0.95 per share and related March 2025 Warrant. The Company also issued 8,832,895 pre-funded warrants (“Pre-Funded Warrants”) at a price to the public of $0.9499 per Pre-funded Warrant.
18
Index
Notes to Condensed Consolidated
Financial Statements
On
March 21, 2025, the Company entered into a subscription agreement (the “Subscription Agreement”) with each of Dr. George Magrath, the Company’s Chief Executive Officer, and Cam Gallagher, the chairman of the Board. Pursuant to the
Subscription Agreement, the Company agreed to issue and sell, in a private offering (the “March 2025 Private Placement”), a total of 392,157
shares of common stock to Mr. Magrath and 784,314 shares of common stock to Mr. Gallagher, as well as 392,157 warrants to purchase shares of common stock to Mr. Magrath and 784,314 warrants to purchase shares of common stock to Mr. Gallagher (the “March 2025 Private Placement Warrants”). Each Private Placement Warrant has an initial exercise
price of $1.15 , expires on the five-year anniversary of the original issuance date and may be called by the Company 30
days following the release of the Company’s OPGx-BEST1 DUO-1001 Cohort 1 data upon achievement of a volume weighted average price of our common stock for 30 consecutive trading days of over $1.725 per share and the trading average
daily volume for such 30 day period exceeds $150,000 per trading day.
The
combined gross proceeds from the March 2025 Offering and the March 2025 Private Placement, which both closed on March 24, 2025 (the “Closing Date”), were approximately $21.5 million, before deducting underwriting discounts and commissions and offering expenses payable by the Company in the amount of $1.8 million.
March
2025 Warrants
The
March 2025 Warrants have an initial exercise price equal to $0.95 per share of common stock and are exercisable for five years from the date of issuance. The exercise prices and numbers of shares of common stock issuable upon exercise are subject to
appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the common stock and also upon any distributions of assets, including cash, stock or other property to our
stockholders. A holder may not exercise the March 2025 Warrant if, after giving effect to such exercise, the holder (together with its affiliates) would beneficially own (as determined in accordance with the terms of the March 2025
Warrants) more than 4.99 % (or, at the election of the holder, 9.99 %) of the outstanding common stock immediately after giving effect to the exercise. Lastly, certain volatility provisions in the event of a fundamental
transaction precluded the March 2025 Warrants from being considered indexed to the Company’s own stock, and as such, were classified on the condensed consolidated balance sheets as warrant liabilities.
The
March 2025 Warrants are callable by the Company in certain circumstances. Subject to certain exceptions, in the event that the March 2025 Warrants are outstanding, if, after the Closing Date, (i) the Company has announced OPGx-BEST1
DUO-1001 Cohort 1 data, (ii) the volume weighted average price of the common stock for 30 consecutive trading days (the
“Measurement Period”, which 30 consecutive trading day period shall not have commenced until after the initial exercise
date) exceeds $1.425 (subject to adjustment), (iii) the trading average daily volume for such Measurement Period exceeds
$150,000 per trading day and (iv) the March 2025 Warrant holder is not in possession of any information that constitutes
or might constitute material non-public information which was provided by the Company, its subsidiaries or any of its officers, directors, employees, agents or affiliates, then the Company may, within one trading day of the end of
such Measurement Period, upon notice, call for cancellation of all or any portion of the March 2025 Warrants for which a notice of exercise has not yet been delivered for consideration equal to $0.001 per March 2025 Warrant share.
In the event of a fundamental transaction, as defined in the Form of Warrant, the
holders of the March 2025 Warrants will be entitled to receive upon exercise the kind and amount of securities, cash or other property that the holders would have received had they exercised immediately prior to such fundamental
transaction. Additionally, as more fully described in the Form of Warrant, in the event of certain fundamental transactions, the holders of the March 2025 Warrants will be entitled to receive consideration in an amount equal to
the Black Scholes Value of the remaining unexercised portion of the March 2025 Warrants on the date of consummation of such fundamental transaction.
The fair value of the March 2025 Warrants at the time of issuance was $14.7 million and were recorded in the warrant liabilities line item in the accompanying condensed consolidated balance sheets upon
issuance. The fair value change during the three and six months ended June 30, 2025 was a benefit of $870,000 and $3,530,000 , respectively. The fair value of these instruments were based on a Monte Carlo simulation incorporating a volatility rate of 80 3.7 % and 4.0 % as of June 30, 2025 and March
24, 2025, respectively, the market price of the Company’s common stock at $0.94 and $1.15 per share as of June 30, 2025 and March 24, 2025, respectively, and other factors over a simulated term of 4.7 years and 5 years
at June 30, 2025 and March 24, 2025, respectively. As of June 30, 2025 the transaction costs attributed to the March 2025 Warrants amounted to approximately $1.3 million and were recorded in the accompanying condensed consolidated statements of comprehensive loss under financing costs.
19
Index
Notes to Condensed Consolidated
Financial Statements
March 2025 Private Placement Warrants
The March 2025 Private Placement Warrants have an initial exercise price equal to $1.15 per share of common stock and are
exercisable for five years from the date of issuance. The March 2025 Private Placement Warrants are callable by
the Company in certain circumstances. Subject to certain exceptions, in the event that the March 2025 Private Placement Warrants are outstanding, if, after the Closing Date, (i) the Company announced OPGx-BEST1 DUO-1001 Cohort
1 data, (ii) the volume weighted average price of the common stock for 30 consecutive trading days (the
“Measurement Period”, which 30 consecutive trading day period shall not have commenced until after the initial
exercise date) exceeds $1.725 (subject to adjustment), (iii) the trading average daily volume for such Measurement
Period exceeds $150,000 per trading day and (iv) the March 2025 Private Placement Warrant holder is not in
possession of any information that constitutes or might constitute material non-public information which was provided by the Company, its subsidiaries or any of its officers, directors, employees, agents or affiliates, then
the Company may, within one trading day of the end of such Measurement Period, upon notice, call for cancellation of all or any portion of the March 2025 Private Placement Warrants for which a notice of exercise has not yet
been delivered for consideration equal to $0.001 per March 2025 Private Placement Warrant share. Other terms under
the March 2025 Private Placement Warrants are generally identical to the terms of the March 2025 Warrants discussed above. Lastly, certain volatility provisions in the event of a fundamental transaction precluded the March
2025 Private Placement Warrants from being considered indexed to the Company’s own stock, and as such, were classified on the condensed consolidated balance sheets as warrant liabilities.
The fair value of the March 2025 Private Placement Warrants at the time of issuance was $0.8 million and were
recorded in the warrant liabilities line item in the accompanying condensed consolidated balance sheets upon issuance. The fair value change during the three and six months ended June 30, 2025 was a benefit of $45,000 and $190,000 ,
respectively.
The fair value of these instruments were based on a Monte Carlo simulation incorporating a volatility rate of 80 3.7 % and 4.0 % as of June 30, 2025 and March 24, 2025, respectively, the market price of the Company’s common stock at $0.94 and $1.15 per share as of June 30, 2025
and March 24, 2025, respectively, and other factors over a simulated term of 4.7 years and 5 years as of June 30, 2025 and March 24, 2025, respectively. As of June 30, 2025 transaction costs
attributed to the March 2025 Private Placement Warrants were de minimis and were recorded in the accompanying condensed consolidated statements of comprehensive loss under financing costs.
Pre-Funded Warrants
The Pre-Funded Warrants have an exercise price of $0.0001 per share of common stock and are immediately exercisable and are
exercisable at any time until exercised in full. The exercise prices and numbers of shares of common stock issuable upon exercise are subject to appropriate adjustment in the event of stock dividends, stock splits,
reorganizations or similar events affecting the common stock. A holder may not exercise the Pre-Funded Warrant if, after giving effect to such exercise, the holder (together with its affiliates) would beneficially own (as
determined in accordance with the terms of the Pre-Funded Warrants) more than 4.99 % (or, at the election of the
holder, 9.99 %) of the outstanding common stock immediately after giving effect to the exercise. In the event of a
fundamental transaction, as defined in the Form of Pre-Funded Warrant, the holders of the Pre-Funded Warrants will be entitled to receive upon exercise of the Pre-Funded Warrants the kind and amount of securities, cash or
other property that the holders would have received had they exercised the Pre-Funded Warrants immediately prior to such fundamental transaction.
The Pre-Funded Warrants were recorded in the accompanying condensed consolidated balance sheets as additional paid-in capital.
The March 2025 Private Placement Warrants have an initial exercise price equal to $
The fair value of the March 2025 Private Placement Warrants at the time of issuance was $
Pre-Funded Warrants
The Pre-Funded Warrants have an exercise price of $
The Pre-Funded Warrants were recorded in the accompanying condensed consolidated balance sheets as additional paid-in capital.
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 provided that, subject to the terms and conditions set
forth therein, the Company had 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 had been issued to Lincoln Park under the Purchase Agreement pursuant to a registration statement. 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.
20
Index
Notes to Condensed Consolidated Financial
Statements
A total of 250,000 shares and 400,000 shares were issued under the Purchase Agreement during the three
and six months ended June 30, 2024, respectively, for net proceeds of $0.5
million and $0.7 million, respectively. The
Company incurred de minimis issuance costs during the three and six months ended June 30, 2024. There were no
A total of 1,946,792
shares of the Company’s common stock were sold under the Purchase Agreement for net proceeds through June 30, 2025 in the amount of $5.2
million. Lastly, the Company incurred issuance costs of $1.4 million, consisting of investor expense reimbursement and
legal costs through June 30, 2025.
The pricing and settlement provisions in the Purchase Agreement
resulted in the recognition of a derivative liability accounted for 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. The fair value change in the derivative liability during the three and six months ended June 30, 2025 and 2024 was de
minimis. The fair value change in the derivative liability is recorded in the fair value change in derivative liabilities line item in the accompanying condensed consolidated statements of comprehensive loss during periods with
valuation changes.
On April 2, 2025, the Company delivered written notice to Lincoln Park of its election to terminate the Purchase Agreement, effective as of April 3, 2025 and as result
the derivative liability related to the Purchase
Agreement was written down to zero.
At-The-Market Program
On January 13, 2025, the Company filed a new prospectus supplement with the U.S. Securities and Exchange Commission with respect to the offer and sale of shares of its common stock,
with an aggregate offering price of up to $40,000,000 , establishing an at-the-market (“ATM”) equity
issuance program. On January 13, 2025, the Company also entered into a sales agreement (the “Sales Agreement”) by and between the Company and Leerink Partners LLC through or to which the Company will sell the Shares via an ATM program.
Upon entry into the Sales Agreement, the Company terminated its prior ATM program pursuant to the Capital on DemandTM Sales Agreement dated March 11, 2021, by and between the Company and JonesTrading Institutional Services
LLC.
During the three and six months ended June 30, 2025, 352,953 0.4 68,000 157,000 538,566 and 1,389,116 shares of common stock were
sold under the ATM program, respectively, for aggregate
gross proceeds in the amount of $1.1 million and $3.3 million, respectively, before deducting issuance expenses, including the placement agent’s fees, legal and accounting expenses, in the amount of $25,000
and $190,000 , respectively. As of June 30, 2025, 8,006,791 shares of common stock
were sold under the ATM programs since their inception for gross proceeds in the amount of $26.8 million and issuance costs
of $1.3 million.
Registered Direct Offering
On June 4, 2021, the Company entered
into a placement agency agreement for a registered direct offering (“RDO”) 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”) at an offering price of $4.875 per one share and per one-half of each RDO Warrant. The RDO
was made pursuant to the Company’s 2021 shelf registration.
21
Index
Notes to Condensed Consolidated Financial
Statements
The RDO Warrants 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 June 30, 2025, 1,538,461 RDO Warrants were outstanding and none have been exercised since issuance.
Subject to limited exceptions, a holder of a RDO Warrant will not have the right to exercise any portion of its RDO Warrants if the holder, together with its affiliates,
would beneficially own in excess of 4.99 % (or, at the election of a holder prior to the date of issuance, 9.99 %) of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise; provided that upon
prior notice to the Company, the holder may increase or decrease the beneficial ownership limitation, provided further that in no event shall the beneficial ownership limitation exceed 9.99 %.
Pre-Merger Financing
On June 17,
2020, the Company, 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 the Company prior to the Rexahn Merger and one director of Rexahn upon closing of the Rexahn 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 June 30, 2025. The
Series A Warrants were accounted for and classified as equity on the accompanying condensed consolidated balance sheets.
Warrant
Activity and Summary
|
Warrants
|
Exercise
Price Per
Warrant
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Term
(Years)
|
|||||||||||||
|
Outstanding and exercisable at December 31, 2024
|
|
$
|
|
$
|
|
|
||||||||||
|
Issued
|
|
$
|
|
$
|
|
|
||||||||||
|
Exercised
|
|
$
|
|
$
|
|
—
|
||||||||||
|
Expired
|
|
$
|
|
$
|
|
—
|
||||||||||
|
Outstanding and exercisable at June 30, 2025
|
|
$
|
|
$
|
|
|
||||||||||
The following table summarizes information about warrants outstanding at June 30, 2025:
|
Exercise Price
|
Number
Outstanding
|
Weighted Average
Remaining
Contractual
life (Years)
|
Number Exercisable
at
June 30,
2025
|
|||||||||||
|
$
|
|
|
|
|
* |
|||||||||
|
$
|
|
|
|
|
* |
|||||||||
|
$
|
|
|
|
|
||||||||||
|
$
|
|
|
|
|
||||||||||
|
Total
|
|
|
||||||||||||
|
*
|
|
22
Index
Notes to Condensed Consolidated Financial
Statements
The above tables exclude the 8,832,895
Pre-Funded Warrants issued in connection with the March 2025 Offering. The Pre-Funded Warrants were deemed as outstanding common stock for net loss per share purposes (See Note 11 – Net Loss per Share).
| 8. |
Stock-based Compensation
|
Stock-based
compensation expense was included in general and administrative and research and development costs as follows in the accompanying condensed statements of comprehensive loss for the three- and six-month periods indicated below (in thousands):
|
|
Three Months
Ended
June 30,
|
Six Months
Ended
June 30,
|
||||||||||||||
|
|
2025
|
2024
|
2025
|
2024
|
||||||||||||
|
General and administrative
|
$ |
$
|
|
$
|
|
$
|
|
|||||||||
|
Research and development
|
|
|
|
|
||||||||||||
|
Total stock-based compensation
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Inducement Plan
On May 22, 2025, the Company amended the Opus Genetics, Inc. 2021 Inducement
Plan (the “Inducement Plan”) to adjust the reserve to 3,325,258 shares of its common stock. The Inducement Plan is
to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule
5635(c)(4) of the Nasdaq Listing Rules.
2020 Equity
Incentive Plan
In November 2020, the stockholders of the Company approved the 2020 Equity Incentive Plan
(the “2020 Plan”) for stock-based awards. Under the 2020 Plan, (i) 1,000,000 new shares of common stock were reserved for
issuance and (ii) up to 70,325 additional shares of common stock may be issued, consisting of (A) shares that remain
available for the issuance of awards under prior equity plans and (B) shares of common stock subject to outstanding stock options or other awards covered by prior equity plans that have been cancelled or expire on or after the date that
the 2020 Plan became effective. Under the 2020 Plan, the shares reserved automatically increase on January 1 of each year, for a period of not more than ten years from the date the 2020 Plan is approved by the stockholders of the Company, commencing on January 1, 2021 and ending on (and including) January 1, 2030, by an amount equal to 5 % of the shares of common stock outstanding as of December 31st
of the preceding calendar year. The 2020 Plan permits the grant of incentive and nonstatutory stock options, appreciation rights, restricted stock, restricted stock units, performance stock and cash awards, and other stock-based
awards. On January 1, 2025, 1,578,733 shares were added to the 2020 Plan as a result of its evergreen provision.
2018
Equity Incentive Plan
Prior to the 2020 Plan, the Company had adopted a
2018 Equity Incentive Plan (the “2018 Plan”) in April 2018 under which 1,175,000 shares of the Company’s common stock were
reserved for issuance to employees, directors and consultants. Upon the effective date of the 2020 Plan, no additional
shares were available for issuance under the 2018 Plan.
Stock Options
During the three and six months ended June 30, 2025, 797,144 and 2,059,829 stock
options were granted, respectively, to directors, officers, employees and consultants, generally vesting over a one-
to four-year period with monthly, quarterly and annual vesting tranches. During the three and six months ended June 30, 2024,
259,086 and 1,021,166
stock options were granted, respectively, to directors, officers, employees and consultants, generally vesting over a one- to four-year period with monthly, quarterly and annual vesting tranches.
23
Index
Notes to Condensed Consolidated Financial
Statements
The Company recognized $511 ,000 and $510 ,000 in
stock-based compensation expense related to stock options during the three months ended June 30, 2025 and 2024, respectively, and $979 ,000
and $957 ,000 during the six months ended June 30, 2025 and 2024, respectively. There were 5,000 stock options exercised during the six months ended June 30, 2025 with an intrinsic value of $1,000 . There were no
stock option exercises during the six months ended June 30, 2024. As of June 30, 2025 and December 31, 2024, 6,654,935 and
5,073,736 stock options were outstanding, respectively. The following table summarizes the Company’s stock option plan activity:
|
Number of
Options
|
Weighted
Average
Exercise
Price
|
Weighted Average
Remaining
Contractual
Term (years)
|
Aggregate
Intrinsic
Value(1)
(in thousands)
|
|||||||||||||
|
|
||||||||||||||||
|
Outstanding at December 31, 2024
|
|
$
|
|
|
$
|
|
||||||||||
|
Granted
|
|
$
|
|
|||||||||||||
|
Exercised
|
(
|
)
|
$
|
|
||||||||||||
|
Forfeited/Cancelled
|
(
|
)
|
$
|
|
||||||||||||
|
Outstanding at June 30, 2025
|
|
$
|
|
|
$
|
|
||||||||||
|
Vested and expected to vest at June 30,
2025
|
|
$
|
|
|
$
|
|
||||||||||
|
Vested and exercisable at June 30, 2025
|
|
$
|
|
|
$
|
|
||||||||||
| (1) |
|
The weighted average fair value per share of options granted during the three and six
months ended June 30, 2025 was $0.64 1.35 and $1.95 , respectively. The Company measures the fair value of stock options with service-based vesting criteria to employees, directors, consultants and directors on
the date of grant using the Black-Scholes option pricing model. The Company does not have sufficient share trading history to support an internal calculation of volatility and expected term. As such, the Company has used a weighted
average volatility considering the volatilities of several guideline companies.
For purposes of identifying similar entities, the
Company considered characteristics such as industry, length of trading history, and stage of life cycle. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The average
expected life of the options was based on the contractual term for agreements that allow for exercise of vested options through the end of the contractual term upon termination of continuous service, and for all other agreements, was
based on the midpoint between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110. The risk-free interest rate is determined by reference to implied
yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant. The Company records forfeitures when they occur.
24
Index
Notes to Condensed Consolidated Financial
Statements
The weighted average assumptions used
in the Black-Scholes option pricing model are as follows during the three and six months ended June 30, 2025 and 2024:
|
|
Three Months
Ended
June 30,
|
Six Months
Ended June 30, |
||||||||||||||
|
|
2025
|
2024
|
2025
|
2024
|
||||||||||||
|
Expected stock price volatility
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
|
Expected life of options (years)
|
|
|
|
|
||||||||||||
|
Expected dividend yield
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
|
Risk free interest rate
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
During the three and six months ended June 30, 2025,
During the three and six months ended June 30, 2025, 436,664 and 473,630 options
were forfeited, respectively. During the three and six months ended
June 30, 2024, 124,030 and 468,935 options were forfeited, respectively.
Restricted Stock Units
During the three and six months ended June 30, 2025, the Company
granted an aggregate of 706,528 and 1,455,361 restricted stock units (“RSUs”), respectively, to the board of directors and certain officers, employees and consultants
under the 2020 Plan. The weighted average grant date per unit fair value of the RSUs granted during the three and six months ended June 30, 2025 was $0.95 four-year period during which 25 % of the RSUs vest annually on each anniversary of the grant date, subject to the recipient’s continued service on such dates.
During the three and six months ended June 30, 2024, the Company granted an aggregate of 278,858 and 592,222 RSUs, respectively, to the board of
directors and certain officers, employees and consultants under the 2020 Plan. The weighted average grant date per unit fair value of the RSUs granted during the three and six months ended June 30, 2024 was $1.73 and $2.24 ,
respectively. The vesting period of the RSUs range from a one- year period to a four-year period during which 25 %
of the RSUs vest annually on each anniversary of the grant date, subject to the recipient’s continued service on such dates.
During the three and six months ended June 30, 2025, 278,858 and 381,534 RSUs vested, respectively, and 231,788
During the three and six months ended June 30, 2024, 104,880 and 144,162 RSUs vested, respectively, and zero and 82,670 RSUs were forfeited during the three and six months ended June
30, 2024, respectively.
The total expense for the three and six months ended June 30, 2025 related to RSUs was $385 ,000 and $724 ,000, respectively. The total expense for the
three and six months ended June 30, 2024 related to these RSUs was $296 ,000 and $589 ,000, respectively. As of June 30, 2025 and December 31, 2024, 2,235,269 and 1,393,230 RSUs were outstanding,
respectively. A
summary of RSU activity is as follows for the six months ended June 30, 2025:
|
|
Number of
Shares
|
|||
|
Non-vested at December 31, 2024
|
|
|||
|
Granted
|
|
|||
|
Forfeited
|
(
|
)
|
||
|
Vested
|
(
|
)
|
||
|
Non-vested at June 30, 2025
|
|
|||
Common Stock Issued for Services
The Company granted stock for services in the amount of 84,243 and 81,234 common
shares during the six months ended June 30, 2025 and 2024, respectively, to two and four board members during these periods, respectively, who elected to receive their board retainers in the form of stock for services. The
weighted average fair value of the shares granted was $1.26 per share and $3.01 per share during the six months ended June 30, 2025 and 2024, respectively, and were 100 % vested upon issuance. The stock-based compensation related to these services amounted to $106 ,000 and $245 ,000 during the six months ended June
30, 2025 and 2024, respectively.
25
Index
Notes to Condensed Consolidated Financial
Statements
General
As of June 30, 2025, 836,920 shares were available for future issuance under the 2020 Plan and Inducement Plan, in the aggregate. No shares were available for future issuance under the 2018 Plan. Unrecognized stock-based compensation cost was $6.1 million as of June 30, 2025. The unrecognized stock-based expense is expected to be recognized over a weighted average period of 1.7 years.
| 9. |
Apexian Sublicense Agreement
|
On January
21, 2020, the Company entered into a sublicense agreement (as amended on June 4, 2020, the “Apexian Sublicense Agreement”) with Apexian, pursuant to which it obtained exclusive worldwide patent and other intellectual property rights that
constitute a Ref-1 Inhibitor program relating to therapeutic applications to treat disorders related to ophthalmic and diabetes mellitus conditions. The lead compound in the Ref-1 Inhibitor program is APX3330, which the Company intends to
develop as an oral tablet therapeutic to treat diabetic retinopathy initially, and potentially later to treat diabetic macular edema, geographic atrophy and age-related macular degeneration. In connection with the Apexian Sublicense
Agreement, the Company issued a total of 891,422 shares of its common stock to Apexian and to certain affiliates of Apexian in
calendar year 2020.
The Company
also agreed to make one-time milestone payments under the Apexian Sublicense Agreement for each of the first ophthalmic indication and the first diabetes mellitus indication for the development and regulatory milestones, and once for each
of several sales milestones. These milestone payments include (i) payments for specified developmental and regulatory milestones (including completion of the first Phase 2 trial and the first Phase 3 pivotal trial in the United States, and
filing and achieving regulatory approval from the FDA for the first New Drug Application for a compound) totaling up to $11
million in the aggregate and (ii) payments for specified sales milestones of up to $20 million in the aggregate, which net sales
milestone payments are payable once, upon the first achievement of such milestone. Lastly, the Company also agreed to make a royalty payment equal to a single-digit percentage of its net sales of products associated with the covered patents
under the Apexian Sublicense Agreement. If it is not terminated pursuant to its terms, the Apexian Sublicense Agreement shall remain in effect until expiration of the last to expire of the covered patents.
None of the milestone or royalty payments were triggered or
deemed probable as of June 30, 2025.
|
10.
|
License and Collaboration Agreements
|
Viatris License Agreement
On
November 6, 2022, the Company entered into the Viatris License Agreement, pursuant to which it granted Viatris (as successor to Famy) an exclusive, perpetual, sub-licensable license to develop, manufacture, import, export and
commercialize (i) PS, for treating (a) reversal of mydriasis, (b) night vision disturbances or dim light vision, and (c) presbyopia, and (ii) PS and low dose pilocarpine for treating presbyopia (together, the “PS Products”) worldwide
except for certain countries and jurisdictions in Asia (the “Viatris Territory”). The Company retains the exclusive right to develop, manufacture, have manufactured, import, export and commercialize the PS Products outside of the Viatris
Territory.
Under the terms of the Viatris License Agreement, the Company in partnership with Viatris, will develop the PS Products in the United States. Viatris will reimburse the Company for agreed-to budgeted costs related to the development of the PS Products through FDA approval and then share costs above the agreed upon threshold amount. Viatris will be responsible for developing the PS Products in countries and jurisdictions in the Viatris Territory outside of the United States.
Under the terms of the Viatris License Agreement, the Company in partnership with Viatris, will develop the PS Products in the United States. Viatris will reimburse the Company for agreed-to budgeted costs related to the development of the PS Products through FDA approval and then share costs above the agreed upon threshold amount. Viatris will be responsible for developing the PS Products in countries and jurisdictions in the Viatris Territory outside of the United States.
26
Index
Notes to Condensed Consolidated Financial
Statements
Pursuant to the Viatris License Agreement, the Company received a one-time non-refundable cash payment of $35 million in November 2022 for the exclusive, perpetual, sub-licensable license to develop, manufacture, import, export and commercialize the
PS Products in the Viatris Territory. In addition, with respect to the PS Products, the Company will be eligible to receive potential additional payments of up to $130 million upon achieving certain specified regulatory or net sales milestones, with the first milestone payment of $10 million already made following approval by the FDA of PS for reversal of mydriasis, which occurred during the third quarter of 2023. The Company will also receive tiered
royalties, starting at low double-digit royalties up to low 20 % royalties, based on the aggregate annual net sales of all PS
Products in the United States, and will receive low double-digit royalties based on all annual net sales in the Viatris Territory outside of the United States. The royalty payments will continue on a country-by-country basis from the date
of the first commercial sale of the first PS Product in a country of the Viatris Territory until December 31, 2040.
The Viatris
License Agreement was accounted for under the provisions of ASC 606. In accordance with the provisions under ASC 606, the Company identified two
distinct performance obligations at the effective date: (1) the license to its intellectual property (“license transfer”) and (2) research and development services.
The
Company determined that the licenses transferred represented functional intellectual property. As such, the revenue related to the licenses was recognized at the point in time in which the license/know-how was delivered to Viatris which
occurred during the fourth quarter of 2022. The Company determined that revenue related to the initial research and development services that were constrained to the 120 -day non-cancellation period were to be recognized over time as the services were rendered based on an estimated percentage of completion input model. The initial research and
development services were completed in the first quarter of 2023. Revenue related to the on-going research and development services are based on activities completed during the period.
Recognition
of Revenue
Revenue
recognized under the Viatris License Agreement during the three and six months ended June 30, 2025 was $2.9 million and $7.3 million, respectively. Revenue recognized under the Viatris License Agreement during the three and six
months ended June 30, 2024 was $1.1 million and $2.8 million, respectively, related to the output of ongoing research and development services and to a much lesser extent royalty payments.
Regulatory Milestones under the Viatris License Agreement
The Company has
evaluated the regulatory milestones that may be received in connection with the Viatris License Agreement. There is uncertainty that the events to obtain the remaining regulatory milestones (aside from the approval by the FDA of RYZUMVI) will
be achieved given the nature of clinical development and the stage of the development of the PS Products. These remaining regulatory milestones will be constrained until it is probable that a significant revenue reversal will not occur.
Sales Milestone and Royalty Payments
Sales
milestones and royalties relate predominantly to a license of intellectual property granted to Viatris and are determined by sales or usage-based thresholds. The sales milestones and royalties are accounted for under the royalty
recognition constraint and are accounted for as constrained variable consideration. The Company applies the royalty recognition constraint for each commercial milestone and
only recognize revenues for each once a sale of a licensed product (achievement of each) occurs.
Each of the
remaining regulatory and sales milestone performance obligations (aside from the $10 million milestone payment related to the FDA’s
approval of PS in the third quarter of 2023) were constrained as of June 30, 2025 and no revenue was recognized related to these
milestones.
27
Index
Notes to Condensed Consolidated Financial
Statements
A reconciliation of the closing balance of the contract assets and unbilled receivables
associated with the Viatris License Agreement is as follows as of June 30, 2025 and 2024 (in thousands):
|
Six Months Ended
June 30,
|
||||||||
| 2025 | 2024 |
|||||||
|
Contract Assets and Unbilled Receivables
|
||||||||
|
Balance as of beginning of six-month period
|
$
|
|
$ | |||||
|
Revenue recognized
|
|
|||||||
|
Reclassification to accounts receivable related to costs billed under the Viatris License Agreement
|
(
|
)
|
( |
) | ||||
|
Balance as of end of six-month period
|
$
|
|
$ | |||||
BioSense License and Assignment
On March 10, 2020, prior to the Rexahn Merger, Rexahn entered into an amendment to its collaboration and license agreement, (as amended, the “BioSense License and
Assignment Agreement”) with BioSense to advance the development and commercialization of the Rexahn RX-3117 drug compound (“RX-3117”) for all human uses in the Republic of Singapore, China, Hong Kong, Macau, and Taiwan (the “BioSense
Territory”).
Under the BioSense License and Assignment Agreement, the Company is
eligible to receive additional milestone payments in an aggregate of up to $84,500 ,000 upon the achievement of development, regulatory and commercial goals and will also be eligible to receive tiered royalties at low double-digit rates on annual net
sales in the BioSense Territory. The Company determined that none of the milestone payments under the BioSense License and Assignment Agreement were probable of payment as of June 30, 2025, and as a result, no revenue related to the milestones was recognized, as the achievement of events entitling the Company to any milestone payments were highly susceptible to
factors outside of the Company’s control. Future sales-based royalties related to the exclusive license to develop RX-3117, if any, will be recognized in the period the underlying sales transaction occurs.
Payments received under the BioSense License and Assignment Agreement will be subject to the CVR Agreement described in
Note 2 – Mergers.
Processa License Agreement
On June 16, 2021, the Company entered into a license agreement (the “Processa License Agreement”) with Processa
Pharmaceuticals, Inc. (“Processa”), pursuant to which the Company agreed to grant Processa an exclusive license to develop, manufacture and commercialize RX-3117 globally, excluding the BioSense Territory.
Pursuant to the agreement, Processa is obligated to make future payments to the Company upon the achievement of certain development, regulatory and commercial milestones. In addition, Processa is obligated to pay the Company mid-single-digit percentage royalties based on annual sales.
On June 27, 2025, Processa notified the Company that it would not be developing RX-3117 and terminated the Processa License Agreement, effective October 25, 2025 (the “Termination Date”). No future payments will be received under the Processa License Agreement after the Termination Date and if any future payments are received prior to the Termination Date, they will be subject to the CVR Agreement described in Note 2 – Mergers.
Pursuant to the agreement, Processa is obligated to make future payments to the Company upon the achievement of certain development, regulatory and commercial milestones. In addition, Processa is obligated to pay the Company mid-single-digit percentage royalties based on annual sales.
On June 27, 2025, Processa notified the Company that it would not be developing RX-3117 and terminated the Processa License Agreement, effective October 25, 2025 (the “Termination Date”). No future payments will be received under the Processa License Agreement after the Termination Date and if any future payments are received prior to the Termination Date, they will be subject to the CVR Agreement described in Note 2 – Mergers.
The Company determined that none of the milestone payments under the Processa License Agreement were probable of payment as of June 30, 2025, and as a result, no revenue related to the milestones was recognized.
SBIR Grant Agreement
In September 2024, Private Opus received a Small Business Innovation Research (“SBIR”) grant through the Department of
Health and Human Services in the amount of $0.9 million to be used on the development of the RHO product. This grant agreement
survives the acquisition of Private Opus. Direct and allocated indirect costs for development activities are reimbursed on a draw-down basis as development activities are completed. For the three and six months ended June 30, 2025, the
Company recognized $173,000 and $197,000
of revenue related to the SBIR grant, respectively, and was recorded as other income, net in the accompanying condensed consolidated statements of comprehensive loss.
28
Index
Notes to Condensed Consolidated Financial Statements
| 11. |
Net Loss per
Share
|
Basic loss per share of common stock is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period. Diluted earnings or loss per share of common stock is computed similarly to basic loss or earnings per share except the weighted average shares outstanding are increased to
include additional shares from the assumed exercise of any common stock equivalents, if dilutive. The Company’s Series A Preferred Stock, warrants, stock options and RSUs, while outstanding, are considered common stock equivalents for
this purpose. Diluted earnings is computed utilizing the treasury method for the warrants, stock options and RSUs. Diluted earnings with respect to the Series A Preferred Stock
utilizing the if-converted method was not applicable during the periods presented as no conditions required for conversion had occurred. No incremental common stock equivalents were included in calculating diluted loss per share because
such inclusion would be anti-dilutive given the net loss reported for the periods presented.
The following potential common shares were not considered in the computation of diluted net loss per share as their effect would have been anti-dilutive for the three- and six-month periods presented below:
|
June 30,
|
||||||||
| 2025 | 2024 | |||||||
|
Series A and RDO warrants
|
||||||||
|
Stock options
|
||||||||
|
RSUs
|
||||||||
|
12.
|
Income Taxes
|
The effective tax rate for the three months ended June 30, 2025 and 2024 was zero no
The Company’s corporate returns are subject to examination for tax years beginning in 2020 for federal income tax purposes and subject to examination in various state jurisdictions. The Company does not have any
reserves for income taxes that represent the Company’s potential liability for uncertain tax positions.
|
13.
|
Deferred Compensation Plan
|
Effective October 1st, 2021, the Company began offering a 401(k) plan (“401K Plan”) to its employees. All employees
are eligible to participate in the 401K Plan. The Company makes
matching contributions equal to 100 % on the first 3 % of compensation that is deferred as an elective deferral and an additional 50 % on the next 2 % of compensation. The Company’s matching
contributions are made on a payroll-by-payroll basis. During the three months ended June 30, 2025 and 2024, the Company contributed $34,000
and $43,000 to the 401K Plan, respectively. During the six months ended June 30, 2025 and 2024, the Company contributed $111,000 and $101,000 to the
401K Plan, respectively.
| 14. |
Subsequent Events
|
Global RDH12 Alliance Agreement
On July 22, 2025, the Company, together with its wholly owned subsidiary, OpusTX, LLC (collectively, “Opus”), entered into a funding and license agreement (the “RDH12 Agreement”) with Eyes on the Future (“EOTF”), and RDH12 Fund for Sight (the “Fund,” and together with EOTF, the “Funding Parties”), relating to Opus’ program to develop gene therapies that treat patients with inherited retinal degeneration associated with mutations in the RDH12 gene (the “RDH12 Program”). The RDH12 Agreement provides for funding by the Funding Parties of up to $1.6 million to support the development
of the RDH12 Program. Opus is required to use the funding to conduct development activities in accordance with a mutually agreed development plan.
On July 22, 2025, the Company, together with its wholly owned subsidiary, OpusTX, LLC (collectively, “Opus”), entered into a funding and license agreement (the “RDH12 Agreement”) with Eyes on the Future (“EOTF”), and RDH12 Fund for Sight (the “Fund,” and together with EOTF, the “Funding Parties”), relating to Opus’ program to develop gene therapies that treat patients with inherited retinal degeneration associated with mutations in the RDH12 gene (the “RDH12 Program”). The RDH12 Agreement provides for funding by the Funding Parties of up to $
29
Index
Notes to Condensed Consolidated Financial
Statements
Under the RDH12 Agreement, Opus is subject to certain diligence obligations to develop a product under the RDH12 Program. If Opus is unable to achieve certain milestones by the specified dates or if certain other events occur (a “License Trigger Event”), then the Funding Parties may exercise their rights under a non-exclusive, global, royalty-free and fully paid-up license granted by Opus to the Funding Parties to develop products under the RDH12 Program. If the Funding Parties exercise such license rights, then Opus will receive a non-exclusive license under the data and other intellectual property generated by the Funding Parties to develop products under the RDH12 Program, and the right to negotiate an exclusive license to such data and intellectual property to commercialize products under the RDH12 Program. The RDH12 Agreement includes certain restrictions on Opus’ ability to out-license rights to the RDH12 Program, and during the term of the RDH12 Agreement Opus may not grant a third party an exclusive license to develop or commercialize products under the RDH12 Program in the United States without the prior written consent of the Funding Parties.
The term of the RDH12 Agreement continues until the earlier of (a) dosing by Opus of three patients in a Phase 1a/2b clinical trial prior to a License Trigger Event, and (b) the first commercial sale of a product under the RDH12 Program following receipt of regulatory approval in the United States or certain other European countries. The RDH12 Agreement will also terminate if an exclusive, global licensee of Opus for the RDH12 Program assumes Opus’ obligations under the RDH12 Agreement. The RDH12 Agreement may be terminated by either party for cause, including material breach or bankruptcy, subject to a cure period, or by the Funding Parties for convenience following a License Trigger Event.
Headquarters Lease Amendment
On July 1st, 2025, the Company amended the lease for its headquarters in Durham, North Carolina to include laboratory space. The new monthly base
rent for the headquarters lease is approximately $5,500 and the lease expires on September 30, 2025 .
30
Index
Opus Genetics, Inc.
Form 10-Q
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
The following discussion of our financial condition and results of operations should be read in
conjunction with the unaudited financial statements and notes included in Part I “Financial Information”, Item I “Financial Statements” of this Quarterly Report on Form 10-Q (the “Report”) and the audited financial statements and related
footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2024.
Forward-Looking Statements
Certain statements contained in this Report are not statements of historical fact and are
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give current
expectations or forecasts of future events or our future financial or operating performance. Such statements include, but are not limited to, statements concerning our strategic business plans, the applications of our product candidates,
ongoing discussions with the U.S. Federal Drug Administration (the “FDA”) regarding various of our drug products, and continued drug development and commercialization under our agreement with Viatris, Inc. (“Viatris”). In some cases, you can
identify forward-looking statements by the following words: “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative
of those terms, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements.
These forward-looking statements reflect our management’s beliefs and views with respect to future events, are based on
estimates and assumptions as of the date of this Report and are subject to risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in these forward-looking statements,
including, without limitation:
| • |
Our clinical data related to gene therapies for the treatment of inherited retinal diseases (“IRDs”) is preliminary and related to a relatively small group of patients, and,
as a result, data that initially appears promising may be revised, updated, or invalidated at a later data readout and/or may ultimately not be capable of duplication in additional patients;
|
| • |
Failure to successfully integrate our businesses following our acquisition of former Opus Genetics Inc. (the “Opus Acquisition”) could have a material adverse effect on our
business, financial condition and results of operations;
|
| • |
The Opus Acquisition significantly expanded our product pipeline and business operations and shifted our business strategies, which may not improve the
value of our common stock;
|
| • |
Our gene therapy product candidates are based on a novel technology that is difficult to develop and manufacture, which may result in delays and
difficulties in obtaining regulatory approval;
|
| • |
Our planned clinical trials may face substantial delays, result in failure, or provide inconclusive or adverse results that may not satisfy FDA
requirements to further develop our therapeutic products;
|
| • |
Delays or difficulties associated with patient enrollment in clinical trials may affect our ability to conduct and complete those clinical trials and
obtain necessary regulatory approvals;
|
| • |
Changes in regulatory requirements could result in increased costs or delays in development timelines;
|
| • |
We depend heavily on the success of our product pipeline; if we fail to find strategic partners or fail to adequately develop or commercialize our pipeline
products, our business will be materially harmed;
|
| • |
Others may discover, develop, or commercialize products similar to those in our pipeline before or more successfully than we do or develop generic variants
of our products even while our product patents remain active, thereby reducing our market share and potential revenue from product sales;
|
| • |
We do not currently have any sales or marketing infrastructure in place and we have limited drug research and discovery capabilities;
|
31
Index
Opus Genetics, Inc.
Form 10-Q
| • |
The future commercial success of our products could significantly depend upon several uncertain factors, including third-party reimbursement practices and
the existence of competitors with similar products;
|
| • |
Product liability lawsuits against us or our suppliers or manufacturers could cause us to incur substantial liabilities and could limit commercialization
of any product candidate that we may develop;
|
| • |
Failure to comply with health and safety laws and regulations could lead to material fines;
|
| • |
We have not generated significant revenue from sales of any products and expect to incur losses for the foreseeable future;
|
| • |
Our future viability is difficult to assess due to our short operating history and our future need for substantial additional capital, access to which
could be limited by any adverse developments that affect the financial services markets;
|
| • |
Raising additional capital may cause our stockholders to be diluted, among other adverse effects;
|
| • |
We operate in a highly regulated industry and face many challenges adapting to sudden changes in legislative reform or the regulatory environment, which
affects our pipeline stability and could impair our ability to compete in international markets;
|
| • |
We may not receive regulatory approval to market our developed product candidates within or outside of the U.S.;
|
| • |
With respect to any of our product candidates that receive marketing approval, we may be subject to substantial penalties if we fail to comply with
applicable regulatory requirements;
|
| • |
Our potential relationships with healthcare providers and third-party payors will be subject to certain healthcare laws and regulations, which could expose
us to extensive potential liabilities;
|
| • |
We rely on third parties for material aspects of our business, such as conducting our nonclinical and clinical trials and supplying and manufacturing bulk
drug substances, which exposes us to certain risks;
|
| • |
We may be unsuccessful in entering into or maintaining licensing arrangements (such as the Viatris License Agreement) or establishing strategic alliances
on favorable terms, which could harm our business;
|
| • |
Our current focus on the cash-pay utilization for future sales of RYZUMVI may limit our ability to increase sales or achieve profitability with this
product;
|
| • |
Inadequate patent protection for our product candidates may result in our competitors developing similar or identical products or technology, which would
adversely affect our ability to successfully commercialize;
|
| • |
We may be unable to obtain full protection for our intellectual property rights under U.S. or foreign laws;
|
| • |
We may become involved in lawsuits for a variety of reasons associated with our intellectual property rights, including alleged infringement suits
initiated by third parties;
|
| • |
We are dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to
successfully implement our business strategy;
|
| • |
As we grow, we may not be able to operate internationally or adequately develop and expand our sales, marketing, distribution, and other corporate
functions, which could disrupt our operations;
|
| • |
The market price of our common stock is expected to be volatile;
|
| • |
Our common stock may be subject to delisting from the Nasdaq Capital Market and delisting could adversely affect our ability to access capital markets;
|
| • |
Factors out of our control related to our securities, such as securities litigation or actions of activist stockholders, could adversely affect our
business and stock price and cause us to incur significant expenses; and
|
| • |
Impact from current or proposed tariffs on imported goods we purchase.
|
32
Index
Opus Genetics, Inc.
Form 10-Q
We discuss many of these risks in greater detail under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K
for the year ended December 31, 2024 and below under the heading “Risk Factors,” and in subsequent reports filed with or furnished to the Securities and Exchange Commission (the “SEC”). Moreover, we operate in a very competitive and rapidly
changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
Any forward-looking statement made by us in this Report speaks only as of the date hereof or as of the date specified
herein. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable laws or regulations.
Overview
Opus Genetics, Inc. (the “Company,” “Opus,” “we,” “us,” or “our”) is a clinical-stage biopharmaceutical company developing gene therapies for
the treatment of inherited retinal diseases (“IRDs”) and small molecule therapies for other ophthalmic disorders.
On October 22, 2024, Opus Genetics, Inc., a Delaware corporation formerly known as Ocuphire Pharma, Inc. (the
“Company,” “Opus,” “we,” “us” or “our”), acquired a private corporation then operating under the name of “Opus Genetics Inc.” (“Private Opus”) pursuant to the terms of an Agreement and Plan of Merger, dated as of October 22, 2024 (such
agreement, the “Merger Agreement” and the transaction consummated via the Merger Agreement, the “Opus Acquisition”), by and among the Company, Private Opus, and certain merger subsidiaries party thereto. As consideration for the Opus
Acquisition, the Company issued 5,237,063 shares of its common stock and 14,145.374 shares of Series A Preferred Stock, each of which is convertible into 1,000 shares of common stock.
Our expanded pipeline following the Opus Acquisition includes assets from the adeno-associated virus (“AAV”) based gene therapy portfolio of
Private Opus that address mutations in genes that cause different forms of Leber congenital amaurosis (“LCA”), bestrophinopathy, and retinitis pigmentosa. Apart from gene therapies, our pipeline also includes Phentolamine Ophthalmic Solution
0.75%, a non-selective alpha-1 and alpha-2 adrenergic antagonist to reduce pupil size, as well as APX3330, a novel small-molecule inhibitor of Ref-1 designed to slow the progression of non-proliferative diabetic retinopathy.
Our most advanced gene therapy program is designed to address mutations in the LCA5 gene (“LCA5”), which encodes the lebercilin protein. More
specifically, we are developing OPGx-LCA5 to treat LCA5-associated IRD, an early-onset retinal degeneration, and an open-label, dose-escalation Phase 1/2 clinical trial is ongoing. The trial has shown clinical proof-of-concept—one-year data has
provided evidence that the therapy supported visual improvement in three out of three adult patients participating in the trial, each of whom has late-stage disease. Enrollment of the first pediatric patient in the LCA5 Phase 1/2 trial
occurred in the first quarter of 2025, and all patients in the cohort have been treated. Initial pediatric data at one-month post-treatment showed vision improvement with no drug-related adverse events. Three-month pediatric data is anticipated
in the third quarter of 2025. The program has received Rare Pediatric Disease Designation and Orphan Drug Designation from the U.S. Food and Drug Administration (“FDA”).
OPGx-BEST1 is another gene therapy candidate in our portfolio being developed for the treatment of IRDs associated with mutations in the BEST1
gene (“Best Disease”), which can lead to legal blindness. In preclinical studies conducted in a naturally occurring canine model of Best Disease, OPGx-BEST1 demonstrated restoration of the retinal pigment epithelium-photoreceptor interface
using AAV-mediated gene delivery, providing evidence in support of a first-in-man clinical trial. We expect to submit an Investigational New Drug (“IND”) application and initiate
a Phase 1/2 trial in the second half of 2025.
33
Index
Opus Genetics, Inc.
Form 10-Q
RYZUMVI and Phentolamine Ophthalmic Solution 0.75% (PS)
In November 2022, we entered into a license and collaboration agreement (the “Viatris License Agreement”) with a company now known as Viatris,
Inc. (“Viatris”), pursuant to which we granted Viatris an exclusive license to develop, manufacture, import, export and commercialize its refractive product candidate Phentolamine Ophthalmic Solution 0.75% (initially known as Nyxol) (“PS”), for treating (a) reversal of pharmacologically-induced mydriasis, (b) decreased vision under mesopic (low) light conditions after keratorefractive surgery, and (c) presbyopia; and (ii) PS and low dose
pilocarpine for treating presbyopia (together, the “PS Products”) worldwide except for certain countries and jurisdictions in Asia (the “Viatris Territory”). PS was approved by the FDA for the treatment for pharmacologically-induced
mydriasis under the brand name RYZUMVI® in September 2023, which triggered a $10 million milestone payment under the
Viatris License Agreement. RYZUMVI was commercialized by Viatris in April 2024. For more information on the Viatris License Agreement, please refer to Note 10 – License and Collaboration Agreements included in Part I, Item 1– Financial
Statements and Supplementary Data of this Report.
PS is a once-daily eye drop formulation of phentolamine mesylate designed to reduce pupil diameter and improve visual acuity. The VEGA-3 Phase 3
clinical trial evaluating PS for the treatment of presbyopia (age-related blurry near vision) has met its primary endpoint, with a statistically significant 27.2% of participants treated with PS 0.75% improved. The Company intends to file a
Supplemental New Drug Application (“sNDA”) for the treatment of presbyopia with PS in the second half of 2025. Additionally, for the treatment of decreased vision under mesopic (low) light conditions following keratorefractive surgery, we
received FDA agreement under Special Protocol Assessment (“SPA”) for LYNX-2, a Phase 3 Trial of PS. The LYNX-2 study met its primary endpoint of a gain of three lines (or 15 letters) or more of distance vision improvement on a low contrast
chart in low light conditions after 15 days of dosing, with 17.3% of patients treated with PS 0.75% improved. We expect that an additional Phase 3 study of LYNX-3 for the treatment of decreased vision under mesopic (low) light conditions
following keratorefractive surgery will commence in the second half of 2025.
APX3330
APX3330 is a selective small molecule that is designed to act on the dual-functioning Apurinic/Apyrimidinic Endonuclease 1/Redox Effector
Factor-1 (APE1/Ref-1) protein, referred to as Ref-1. APX3330 has completed a Phase 2 clinical study in 103 patients and FDA agreement under SPA was reached for a Phase 3 program. However, due to the capital requirements and developmental
timelines associated with APX3330, we are currently seeking a strategic partner to advance the clinical development of this diabetic retinopathy program and redirecting existing resources toward the acquired gene therapy programs.
Recent Developments
Global RDH12 Alliance Agreement
On July 22, 2025, the Company, together with its wholly owned subsidiary, OpusTX, LLC (collectively,
“Opus”), entered into a funding and license agreement (the “RDH12 Agreement”) with Eyes on the Future (“EOTF”), and RDH12 Fund for Sight (the “Fund,” and together with EOTF, the “Funding Parties”), relating to Opus’ program to develop gene
therapies that treat patients with inherited retinal degeneration associated with mutations in the RDH12 gene (the “RDH12 Program”). The RDH12 Agreement provides for funding by the Funding Parties of up to $1.6 million to support the
development of the RDH12 Program. For more information on the terms of the RDH12 Agreement, see Note 14 — Subsequent Events in Part I, Item 1 – Financial Statements and Supplementary Data of this Report..
RDF Agreement
On June 13, 2025, we entered into a funding agreement (the “RDF Agreement”) with the Foundation Fighting
Blindness Retinal Degeneration Fund (“RDF”), whose sole member is Foundation Fighting Blindness (“FFB”), a significant stockholder of
the Company, relating to our program to develop gene therapies to treat patients impacted by retinitis pigmentosa caused by pathogenic variants in the Mer proto-oncogene tyrosine kinase (MERTK) gene (the “MERTK Program”). The RDF
Agreement provides for nondilutive funding by RDF of up to $2.0 million (the “Funding Payments”) to support the development of the MERTK Program, $1.0 million of which was disbursed to us in June 2025 and up to $1.0 million of which may
be disbursed to us upon achievement of a specified development milestone subject to RDF’s receipt of eligible funds. For more information on the terms and related obligations under the RDF Agreement, see Note 5 — Related Party Transactions in Part I, Item 1 – Financial Statements and Supplementary Data of this Report.
34
Index
Opus Genetics, Inc.
Form 10-Q
Letter Agreement and Strategic Partnership—FFB
On May 27, 2025 a binding letter of agreement (“2025 Letter Agreement”) between the Company and FFB was executed that superseded and canceled
the previous binding letter agreement between the parties, executed on August 22, 2022.
Under the 2025 Letter Agreement, we will collaborate with FFB and the Jaeb Center for Health Research on portions of a study involving
individuals with retinal dystrophies associated with mutations in the RDH12 or BEST1 genes. For more information on the terms of the 2025 Letter Agreement and related payments thereunder, see Note 5 — Related
Party Transactions in Part I, Item 1 – Financial Statements and Supplementary Data” of this Report.
Regenerative Medicine Advanced Therapy (RMAT) designation to OPGx-LCA5
On May 6, 2025, we announced that the FDA has granted Regenerative Medicine Advanced Therapy (RMAT) designation to
OPGx-LCA5, our investigational gene therapy for the treatment of Leber Congenital Amaurosis (LCA) due to genetic variations in the LCA5 gene. The RMAT designation for OPGx-LCA5 is based on early clinical evidence from our ongoing Phase 1/2
open-label, dose-escalation trial, which is evaluating the safety and potential efficacy of OPGx-LCA5 in patients with severe vision loss due to confirmed mutations in the LCA5 gene. The RMAT designation program offers the potential for
expedited development and review of regenerative medicine therapies that demonstrate the potential to address serious or life-threatening diseases based on preliminary clinical evidence. The designation provides sponsors with early
interactions with the FDA, guidance on efficient development and manufacturing, and the opportunity to discuss surrogate endpoints to support accelerated approval.
Conversion of Series A Preferred Stock to Common Stock
During the 2025 Annual Meeting, our stockholders voted to approve the conversion of each share of Series A Preferred Stock
into 1,000 shares of common stock. Subsequently, on May 5, 2025, all shares of Series A Preferred Stock were converted into 14,145,374 shares of common stock.
March 2025 Offering and Private Placement
On March 21, 2025, we entered into an underwriting agreement with Craig-Hallum Capital Group, LLC, as the sole underwriter
(the “March 2025 Offering”). Under the March 2025 Offering and the March 2025 Private Placement (as defined below), we agreed to issue and sell common stock and warrants to purchase up to 13,396,207 shares of common stock, 8,832,895 pre-funded
warrants to purchase common stock and 22,239,102 warrants to purchase common stock. The aggregate proceeds received from the March 2025 Offering and March 2025 Private Placement was 21.5 million. See Historical
Capital Resources section below for further detail.
Strategic Outlook
We intend to advance our current active pipeline and may explore opportunities to out-license from our portfolio or
in-license other drug candidates. To date, our primary activities have been conducting research and development activities, performing business and financial planning, recruiting personnel and raising capital. We have one product, RYZUMVI,
approved for sale that is generating royalties based on sales by Viatris, and we do not expect to consistently generate significant revenues, other than license and collaborations revenue, unless and until the FDA or other regulatory
authorities approve, and we successfully commercialize, LCA5, BEST1, other internally-developed assets or PS for other indications. Until such time, if ever, as we can consistently generate substantial product revenue, we expect to finance
our cash needs through a combination of equity, debt and alternative financings as well as through collaborations, strategic alliances and licensing arrangements.
Through June 30, 2025, we have funded our operations primarily through equity financings, the issuance of convertible
notes in private placements, and license fee and milestone payments in connection with the Viatris License Agreement.
Our net loss was $7.4 million and $15.6 million for the three and six months ended June 30, 2025, respectively, as compared
to a net loss of $7.8 million and $14.9 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, we had an accumulated deficit of $154.6 million. We anticipate that our expenses will continue to increase as
we:
35
Index
Opus Genetics, Inc.
Form 10-Q
| • |
continue clinical trials for LCA5, BEST1, PS and for any other product candidate in our future pipeline;
|
| • |
continue nonclinical studies for our pipeline of gene therapies;
|
| • |
develop additional product candidates that we identify, in-license or acquire;
|
| • |
seek regulatory approvals for any product candidates that successfully complete clinical trials;
|
| • |
contract to manufacture our product candidates;
|
| • |
maintain, expand and protect our intellectual property portfolio;
|
| • |
hire additional staff, including clinical, scientific, operational and financial personnel, to execute our business plan;
|
| • |
add operational, financial and management information systems and personnel to support our product development and potential future commercialization
efforts;
|
| • |
continue to operate as a public company; and
|
| • |
establish on our own or with partners, a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory
approval.
|
Our net loss will likely continue to fluctuate significantly from quarter to quarter and year to year, depending on the
timing of our nonclinical studies, clinical trials, expenditures on other research and development activities (and reimbursement thereof), and from potential milestone payments received from and revenue earned under the Viatris License
Agreement or any other license and collaboration agreements that we enter into, and potential payments that may become payable from time to time under the Apexian Sublicense Agreement.
Financial Operations Overview
License and Collaborations Revenue
License and collaborations revenue to date was derived from a one-time non-refundable payment
related to a license transfer, an additional milestone payment and reimbursement of expenses earned under the Viatris License Agreement, and to a much lesser degree, from license agreements with BioSense Global LLC (“BioSense”) and Processa
Pharmaceuticals, Inc. (“Processa”). We anticipate that we will recognize revenue as we earn reimbursement for research and development services in connection with the Viatris License Agreement and we may earn additional revenues from
potential milestone and royalty payments from the agreements with Viatris or from other license agreements entered into the future; however, the attainment of milestones or level of sales required to earn significant royalty payments is
highly uncertain for the reasons explained below. Until further notice, we will report earned RYZUMVI royalties as a component of license and collaboration revenue listed in the condensed consolidated statements of comprehensive loss.
To date, outside of the license and collaborations revenue referenced above, we do not expect to generate significant
revenue unless or until RYZUMVI sales become material, or regulatory approval is obtained, and commercialization begins for LCA5, BEST1, other internally-developed assets or PS for additional indications. If we fail to complete the
development of LCA5, BEST1, PS, or any other product candidate we may pursue in the future in a timely manner or fail to obtain regulatory approval, our ability to generate significant revenue will be compromised.
36
Index
Opus Genetics, Inc.
Form 10-Q
Operating Expenses
The Company’s operating expenses are classified into two categories: general and administrative and research and
development.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and
stock-based compensation costs, for personnel in functions not directly associated with research and development activities. Other significant costs include insurance coverage for directors and officers and other property and liability
exposures, legal fees relating to intellectual property and corporate matters, business development costs, professional fees for accounting and tax services, other services provided by business consultants and legal settlements.
Research and Development Expenses
To date, our research and development expenses have related primarily to the clinical stage development of APX3330 and
PS. Research and development expenses consist of costs incurred in performing research and development activities, including compensation, benefits and stock-based compensation costs for research and development employees and costs for
consultants, costs associated with nonclinical studies and clinical trials, regulatory activities, manufacturing activities to support clinical activities, license fees, nonlegal patent costs, fees paid to external service providers that
conduct certain research and development, and an allocation of overhead expenses. We do not expect to incur meaningful research and development expenses in the future for APX3330, and we announced plans to seek a partner for the program to
advance development.
Pursuant to the Viatris License Agreement, our budgeted research and development expenses related to the development of
PS to date have been fully reimbursed by Viatris. However, all research and development costs, including those related to PS, are expensed as incurred, and costs incurred by third parties are expensed as the contracted work is performed. We
accrue for costs incurred as the services are being provided by monitoring the status of the study or project, and as the invoices are received from our external service providers. We adjust our accrual as actual costs become known. Research
and development activities are central to our business model.
We expect that LCA5, BEST1, PS and other internally-developed assets will have higher development costs during the later
stages of clinical development, as compared to costs incurred during their earlier stages of development, primarily due to the increased size and duration of the later-stage clinical trials and associated nonclinical studies. We expect our
research and development expenses to increase over the next several years. However, it is difficult for us to determine with certainty the duration, costs and timing to complete our current or future nonclinical programs and clinical trials
of LCA5, BEST1, PS and other internally-developed assets.
Fair value change in warrant and other derivative liabilities
The fair value change in warrant and other derivative liabilities consists of the fair value changes associated March
2025 Warrants and March 2025 Private Placement Warrants, described further below, and to a much lesser extent, the Lincoln Parch Purchase Agreement also described further
below.
Financing costs
Financing costs consist of issuance costs attributed to our March 2025 Warrants and March 2025 Private Placement Warrants
described below. There were no issuance costs attributed to the equity line financing with Lincoln Park during the periods presented.
Other Income, net
Other income, net includes interest earned from cash and cash equivalent investments, realized and unrealized gains
(losses) from equity investments, reimbursements in connection with grants and other sources when they occur. In addition, this line item includes payments made by the Company in connection with the Contingent Value Rights Agreement (the “CVR
Agreement”) discussed further below with former shareholders Rexahn when applicable.
37
Index
Opus Genetics, Inc.
Form 10-Q
Provision for Income Taxes
Provision for income taxes consists of federal and state income taxes in the United States, as well as deferred income
taxes and changes in related valuation allowance reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Currently, a full valuation allowance has been provided on the net deferred tax assets as of June 30, 2025 and December 31, 2024 given the uncertainty of future taxable income and other related factors impacting the realizability or our
remaining net deferred tax assets.
Results of Operations
Comparison of Three Months Ended June 30, 2025 and 2024
The following table summarizes Opus’s operating results for the periods indicated (in thousands):
|
For the Three Months Ended
|
||||||||||||
|
June 30,
|
||||||||||||
|
2025
|
2024
|
Change
|
||||||||||
|
License and collaborations revenue
|
$
|
2,882
|
$
|
1,112
|
$
|
1,770
|
||||||
|
Operating expenses:
|
||||||||||||
|
General and administrative
|
5,766
|
3,354
|
2,412
|
|||||||||
|
Research and development
|
6,022
|
6,086
|
(64
|
)
|
||||||||
|
Total operating expenses
|
11,788
|
9,440
|
2,348
|
|||||||||
|
Loss from operations
|
(8,906
|
)
|
(8,328
|
)
|
(578
|
)
|
||||||
|
Fair value change in warrant and other derivative liabilities
|
917
|
—
|
917
|
|||||||||
|
Financing costs
|
35
|
—
|
35
|
|||||||||
|
Other income, net
|
534
|
563
|
(29
|
)
|
||||||||
|
Loss before income taxes
|
(7,420
|
)
|
(7,765
|
)
|
345
|
|||||||
|
Provision for income taxes
|
—
|
—
|
—
|
|||||||||
|
Net loss
|
$
|
(7,420
|
)
|
$
|
(7,765
|
)
|
$
|
345
|
||||
License and Collaborations Revenue
License and collaborations revenue was $2.9 million and $1.1 million for the three months ended June 30, 2025 and 2024,
respectively. Revenue during both quarterly periods was derived from the Viatris License Agreement, largely for the reimbursement of research and development services. To a much lesser extent, revenue includes an earned royalty payment from the
sales of RYZUMVI, indicated for the treatment of pharmacologically-induced mydriasis produced by adrenergic agonists (e.g., phenylephrine) or parasympatholytic (e.g., tropicamide) agents by our commercial partner. The
$1.8 million increase in license and collaborations revenue during the current three month period ended June 30, 2025 compared to the corresponding prior year period was due to an increase in PS research and development services.
General and Administrative
General and administrative expenses for the three months ended June 30, 2025 were $5.8 million compared to $3.4 million for
the three months ended June 30, 2024. The increase of $2.4 million was primarily attributable to public company related costs of $1.1 million, general legal costs of $0.4 million, patent costs of $0.3 million, payroll related costs of $0.4
million, business development costs of $0.1 million, and other operating expenses of $0.1 million on a net basis when compared to the corresponding prior year period. General and administrative expenses included $0.6 million and $0.5 million in
stock-based compensation expense during the three months ended June 30, 2025 and 2024, respectively.
38
Index
Opus Genetics, Inc.
Form 10-Q
Research and Development
The following table illustrates the components of our research and development expenses for the periods presented (in
thousands):
|
For the Three Months Ended
|
||||||||||||
|
June 30,
|
||||||||||||
|
2025
|
2024
|
Change
|
||||||||||
|
External costs:
|
||||||||||||
|
Phentolamine Ophthalmic Solution 0.75% (“PS”)
|
$
|
2,458
|
$
|
1,052
|
$
|
1,406
|
||||||
|
IRD programs
|
2,188
|
—
|
2,188
|
|||||||||
|
APX 3330
|
(246
|
)
|
4,024
|
(4,270
|
)
|
|||||||
|
Unallocated
|
102
|
81
|
21
|
|||||||||
|
Total external cost
|
4,502
|
5,157
|
(655
|
)
|
||||||||
|
Internal costs:
|
||||||||||||
|
Employee related expenses
|
1,449
|
846
|
603
|
|||||||||
|
Facilities, supplies and other
|
71
|
83
|
(12
|
)
|
||||||||
|
Total internal costs
|
1,520
|
929
|
591
|
|||||||||
|
Total research and development expenses
|
$
|
6,022
|
$
|
6,086
|
$
|
(64
|
)
|
|||||
Research and development expenses for the three months ended June 30, 2025 were $6.0 million compared to $6.1
million for the three months ended June 30, 2024. The $0.1 million decrease was primarily attributable to both lower manufacturing costs of $2.3 million and lower
consulting costs and other operating costs of $0.1 million on a net basis, offset largely by higher clinical costs of $0.9 million, toxicology costs of $0.8 million and payroll related costs of $0.6 million. Pursuant to the Viatris License
Agreement, our budgeted research and development expenses related to the development of the PS Products have been fully reimbursed by Viatris to date. Research and development expenses included $0.3 million in stock-based compensation expense
during each of the three months ended June 30, 2025 and 2024.
Fair value change in warrant and other derivative liabilities
The fair value change in warrant and other derivative liabilities was attributed to the March 2025 Warrants and March 2025
Private Placement Warrants, as described further below, and was $0.9 million for the three months ended June 30, 2025. The fair value changes are attributed to the fluctuations in our common stock fair value and underlying changes in
volatility, expected term and interest rates.
Financing costs
Financing costs for the three months ended June 30, 2025 were a net credit $(35,000) attributed largely to renegotiated
legal costs in connection with the March 2025 Warrants and March 2025 Private Placement Warrants. We did not have any financing costs during the three months ended June 30, 2024.
Other Income, net
During the three months ended June 30, 2025, Opus had other income, net of $0.5 million related primarily to interest
income in connection with our cash and cash equivalents on-hand and to a lesser extent grant revenue of $$0.2 million.
During the three months
ended June 30, 2024, Opus had other income, net of $0.6 million related primarily to interest income in connection with our cash and cash equivalents on-hand.
39
Index
Opus Genetics, Inc.
Form 10-Q
Comparison of Six Months Ended June 30, 2025 and 2024
The following table summarizes Opus’s operating results for the periods indicated (in thousands):
|
For the Six Months Ended
|
||||||||||||
|
June 30,
|
||||||||||||
|
2025
|
2024
|
Change
|
||||||||||
|
License and collaborations revenue
|
$
|
7,252
|
$
|
2,823
|
$
|
4,429
|
||||||
|
Operating expenses:
|
||||||||||||
|
General and administrative
|
12,112
|
8,024
|
4,088
|
|||||||||
|
Research and development
|
13,975
|
10,835
|
3,140
|
|||||||||
|
Total operating expenses
|
26,087
|
18,859
|
7,228
|
|||||||||
|
Loss from operations
|
(18,835
|
)
|
(16,036
|
)
|
(2,799
|
)
|
||||||
|
Fair value change in warrant and other derivative liabilities
|
3,722
|
—
|
3,722
|
|||||||||
|
Financing costs
|
(1,337
|
)
|
—
|
(1,337
|
)
|
|||||||
|
Other income, net
|
836
|
1,165
|
(329
|
)
|
||||||||
|
Loss before income taxes
|
(15,614
|
)
|
(14,871
|
)
|
(743
|
)
|
||||||
|
Provision for income taxes
|
—
|
—
|
—
|
|||||||||
|
Net loss
|
$
|
(15,614
|
)
|
$
|
(14,871
|
)
|
$
|
(743
|
)
|
|||
License and Collaborations Revenue
License and collaborations revenue was $7.3 million and $2.8 million for the six months ended June 30, 2025 and 2024,
respectively. Revenue during the six month periods was derived primarily from the reimbursement of research and development services under the Viatris License Agreement. The $4.4 million increase in license and collaborations revenue during the
current six month period ended June 30, 2025 when compared to the corresponding prior year period was due to an increase in PS research and development services.
General and Administrative
General and administrative expenses for the six months ended June 30, 2025 were $12.1 million compared to $8.0 million for
the six months ended June 30, 2024. The increase of $4.1 million was primarily attributable to public company related costs of $1.7 million, legal support costs of $1.2 million, patent fees of $0.6 million, professional service costs of $0.3
million, payroll related costs of $0.2 million and business development activity and other operating costs on a net basis of $0.1 million when compared to the corresponding prior year period. General and administrative expenses totaled $1.2
million and $1.3 million in stock-based compensation expense during the six months ended June 30, 2025 and 2024, respectively.
40
Index
Opus Genetics, Inc.
Form 10-Q
Research and Development
The following table illustrates the components of our research and development expenses for the periods presented (in
thousands):
|
For the Six Months Ended
|
||||||||||||
|
June 30,
|
||||||||||||
|
2025
|
2024
|
Change
|
||||||||||
|
External costs:
|
||||||||||||
|
Phentolamine Ophthalmic Solution 0.75% (“PS”)
|
$
|
6,493
|
$
|
2,117
|
$
|
4,376
|
||||||
|
IRD programs
|
4,111
|
—
|
4,111
|
|||||||||
|
APX3330
|
147
|
6,687
|
(6,540
|
)
|
||||||||
|
Unallocated
|
238
|
148
|
90
|
|||||||||
|
Total external cost
|
10,989
|
8,952
|
2,037
|
|||||||||
|
Internal costs:
|
||||||||||||
|
Employee related expenses
|
2,858
|
1,783
|
1,075
|
|||||||||
|
Facilities, supplies and other
|
128
|
100
|
28
|
|||||||||
|
Total internal costs
|
2,986
|
1,883
|
1,103
|
|||||||||
|
Total research and development expenses
|
$
|
13,975
|
$
|
10,835
|
$
|
3,140
|
||||||
Research and development expenses for the six months ended June 30, 2025 were $14.0 million compared to $10.8 million for
the six months ended June 30, 2024. The $3.1 million increase, as rounded, was primarily attributable to increased clinical costs of $4.4 million related to the PS Vega-3 and PS Lynx-2 trials; toxicology costs of $2.7 million, clinical costs of
$1.0 million, and consulting costs of $0.4 million related to the IRD programs; and payroll related costs of $1.1 million, partially offset by decreased manufacturing costs of $2.7 million, toxicology costs of $1.7 million, and other operating
costs of $2.1 million on a net basis related to APX3330 when compared to the corresponding prior year period. Pursuant to the Viatris License Agreement, our budgeted research and development expenses related to the development of PS are fully
reimbursed by Viatris. Research and development expenses also included $0.6 million and $0.5 million in stock-based compensation expense during the six months ended June 30, 2025 and 2024, respectively.
Fair value change in warrant and other derivative liabilities
The fair value change in warrant and other derivative liabilities was attributed largely to the March 2025 Warrants and
March 2025 Private Placement Warrants, as described further below. The fair value change in the March 2025 Warrants and March 2025 Private Placement Warrants was $3.7 million for the six months ended June 30, 2025. The fair value changes are
attributed to the fluctuations in our common stock fair value and underlying changes in volatility, expected term and interest rates.
Financing costs
Financing costs for the six months ended June 30, 2025 of $1.3 million was comprised of issuance costs attributed to the
March 2025 Warrants and March 2025 Private Placement Warrants. We did not have any financing costs during the six months ended June 30, 2024.
Other Income, net
During the six months ended June 30, 2025, Opus had other income, net of $0.8 million related primarily to interest income
in connection with our cash and cash equivalents on-hand and to a lesser extent grant revenue of $0.2 million.
During the six months ended June 30, 2024, Opus had other income, net of $1.2 million related primarily to interest income
in connection with our cash and cash equivalents on-hand.
41
Index
Opus Genetics, Inc.
Form 10-Q
Liquidity and Capital Resources
Capital Resources
As of June 30, 2025, our principal sources of liquidity consisted of cash and cash equivalents of $32.4 million. We
believe that our cash on hand as of June 30, 2025 will be sufficient to fund our operations for at least twelve months beyond the date of this filing. As of June 30, 2025, our cash and cash equivalents were invested primarily in cash deposits
and cash equivalent investments at four large financial institutions.
Historical Capital Resources
Our primary source of cash to fund our operations has been various equity offerings in the amount of $89.7 million and the
issuance of convertible notes in the amount of $8.5 million, inclusive of the promissory notes exchanged for Opus convertible notes. In addition, we received a one-time non-refundable cash payment of $35.0 million during the fourth quarter of
2023, a $10.0 million milestone payment during the fourth quarter of 2023, and have received reimbursement for costs related to development since the fourth quarter of 2022, all in connection with the Viatris License Agreement. Lastly, we
received funding in the amount of $1.0 million under the RDF Agreement.
March 2025 Financings
On March 21, 2025, we entered into an underwriting agreement (the “Underwriting Agreement”) with Craig-Hallum Capital
Group, LLC, as the sole underwriter (the “Underwriter”). Pursuant to the Underwriting Agreement, we agreed to issue and sell, in an underwritten public offering (the “March 2025 Offering”), 12,219,736 shares of common stock and warrants to
purchase up to 21,052,631 shares of common stock (the “March 2025 Warrants”). Each share of common stock was sold together with one March 2025 Warrant to purchase one share of common stock, at a price to the public of $0.95 per share and
related March 2025 Warrant. We also agreed to issue 8,832,895 pre-funded warrants (“Pre-Funded Warrants”) at a price to the public of $0.9499 per Pre-funded Warrant.
Also on March 21, 2025, we entered into a subscription agreement (the “Subscription Agreement”) with each of Dr. George
Magrath, the Company’s Chief Executive Officer, and Cam Gallagher, the chairman of the Company’s board of directors (the “Board”). Pursuant to the Subscription Agreement, the Company agreed to issue and sell, in a private offering (the “March
2025 Private Placement”), a total of 392,157 shares of common stock to Mr. Magrath and 784,314 shares of common stock to Mr. Gallagher, as well as 392,157 warrants to purchase shares of common stock to Mr. Magrath and 784,314 warrants to
purchase shares of common stock to Mr. Gallagher (the “March 2025 Private Placement Warrants”). Each March 2025 Private Placement Warrant has an initial exercise price of $1.15, expires on the five-year anniversary of the original issuance
date and may be called by the Company 30 days following the release of the Company’s OPGx-BEST1 DUO-1001 Cohort 1 data upon achievement of a volume weighted average price of our common stock for 30 consecutive trading days of over $1.725 per
share and the trading average daily volume for such 30 day period exceeds $150,000 per trading day.
The combined gross proceeds from the March 2025 Offering and the March 2025 Private Placement, which closed on March 24,
2025, were approximately $21.5 million, before deducting underwriting discounts and commissions and offering expenses payable by us.
The March 2025 Offering (including the shares of common stock issuable from time to time upon exercise of the March 2025
Warrants and the Pre-Funded Warrants) was made pursuant to our Registration Statement on Form S-3 (File No. 333-276462) filed with the Securities and Exchange Commission on January 10, 2024, including the prospectus dated January 23, 2024
contained therein, as the same has been supplemented.
March 2025 Warrants
The March 2025 Warrants have an initial exercise price equal to $0.95 per share of common stock and are exercisable for
five years from the date of issuance. The exercise prices and numbers of shares of common stock issuable upon exercise are subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events
affecting the common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders. A holder may not exercise the march 2025 Warrant if, after giving effect to such exercise, the holder (together
with its affiliates) would beneficially own (as determined in accordance with the terms of the March 2025 Warrants) more than 4.99% (or, at the election of the holder, 9.99%) of the outstanding common stock immediately after giving effect to
the exercise.
42
Index
Opus Genetics, Inc.
Form 10-Q
The March 2025 Warrants are callable by us in certain circumstances. Subject to certain exceptions, in the event that the
March 2025 Warrants are outstanding, if, after the closing date (March 24, 2025), (i) we have announced OPGx-BEST1 DUO-1001 Cohort 1 data, (ii) the volume weighted average price of the common stock for 30 consecutive trading days (the
“Measurement Period”, which 30 consecutive trading day period shall not have commenced until after the initial exercise date) exceeds $1.425 (subject to adjustment), (iii) the trading average daily volume for such Measurement Period exceeds
$150,000 per trading day and (iv) the March 2025 Warrant holder is not in possession of any information that constitutes or might constitute material non-public information which was provided by the Company, its subsidiaries or any of its
officers, directors, employees, agents or affiliates, then the Company may, within one trading day of the end of such Measurement Period, upon notice, call for cancellation of all or any portion of the March 2025 Warrants for which a notice
of exercise has not yet been delivered for consideration equal to $0.001 per March 2025 Warrant share.
In the event of a fundamental transaction, as defined in the Form of Warrant, the holders of the March 2025 Warrants will
be entitled to receive upon exercise the kind and amount of securities, cash or other property that the holders would have received had they exercised immediately prior to such fundamental transaction. Additionally, as more fully described in
the Form of Warrant, in the event of certain fundamental transactions, the holders of the March 2025 Warrants will be entitled to receive consideration in an amount equal to the Black Scholes Value of the remaining unexercised portion of the
March 2025 Warrants on the date of consummation of such fundamental transaction.
March 2025 Private Placement Warrants
The March 2025 Private Placement Warrants have an initial exercise price equal to $1.15 per share of common stock and are
exercisable for five years from the date of issuance. The March 2025 Private Placement Warrants are callable by us in certain circumstances. Subject to certain exceptions, in the event that the March 2025 Private Placement Warrants are
outstanding, if, after the closing date (March 24, 2025), (i) the Company announces OPGx-BEST1 DUO-1001 Cohort 1 data, (ii) the volume weighted average price of the common stock for 30 consecutive trading days (the “Measurement Period”, which
30 consecutive trading day period shall not have commenced until after the initial exercise date) exceeds $1.725 (subject to adjustment), (iii) the trading average daily volume for such Measurement Period exceeds $150,000 per trading day and
(iv) the March 2025 Private Placement Warrant holder is not in possession of any information that constitutes or might constitute material non-public information which was provided by the Company, its subsidiaries or any of its officers,
directors, employees, agents or affiliates, then the Company may, within one trading day of the end of such Measurement Period, upon notice, call for cancellation of all or any portion of the March 2025 Private Placement Warrants for which a
notice of exercise has not yet been delivered for consideration equal to $0.001 per March 2025 Private Placement Warrant share. All other terms under the March 2025 Private Placement Warrants are identical to the terms of the March 2025
Warrants discussed above.
Pre-Funded Warrants
The Pre-Funded Warrants have an exercise price of $0.0001 per share of common stock and are immediately exercisable and
are exercisable at any time until exercised in full. The exercise prices and numbers of shares of common stock issuable upon exercise are subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or
similar events affecting the common stock. A holder may not exercise the Pre-Funded Warrant if, after giving effect to such exercise, the holder (together with its affiliates) would beneficially own (as determined in accordance with the terms
of the Pre-Funded Warrants) more than 4.99% (or, at the election of the holder, 9.99%) of the outstanding common stock immediately after giving effect to the exercise. In the event of a fundamental transaction, as defined in the Form of
Pre-Funded Warrant, the holders of the Pre-Funded Warrants will be entitled to receive upon exercise of the Pre-Funded Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised
the Pre-Funded Warrants immediately prior to such fundamental transaction.
43
Index
Opus Genetics, Inc.
Form 10-Q
Lincoln Park Purchase Agreement
On August 10, 2023, we 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 provided that, subject to the terms and conditions set forth therein, we had 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. A total of 1,946,792 shares of common stock were sold under the Purchase Agreement for gross proceeds through the
termination of the Purchase Agreement in the amount of $5.2 million.
On April 2, 2025, the Company delivered written notice to Lincoln Park of its election to terminate the Purchase
Agreement, effective as of April 3, 2025.
At-The-Market Program
On January 10, 2024, we filed a Form S-3 shelf registration under the Securities Act which was declared effective by the
SEC on January 23, 2024 under which the Company may offer and sell, from time to time in our sole discretion, securities having an aggregate offering price up to $175 million. On March 11, 2021, we entered into a sales agreement with
JonesTrading Institutional Services LLC (“JonesTrading”) under which we may offer and sell, from time to time at our sole discretion, to or through JonesTrading, acting as agent and/or principal, shares of our common stock having an aggregate
offering price of up to $40 million (the “ATM”). A total of 8,006,791 shares of common stock were sold under the ATM since its inception for gross proceeds through the filing of this Report in the amount of $26.8 million.
On January 13, 2025, the Company filed a new prospectus supplement with the U.S. Securities and Exchange Commission with
respect to the offer and sale of shares of its common stock, with an aggregate offering price of up to $40,000,000, establishing an at-the-market equity issuance program. On January 13, 2025, the Company also entered into a sales agreement (the
“Sales Agreement”) by and between the Company and Leerink Partners LLC (“Leerink”) through or to which the Company will sell the Shares via an ATM program. Upon entry into the Sales Agreement, the Company
terminated its prior ATM program pursuant to the Capital on DemandTM Sales Agreement dated March
11, 2021, by and between the Company and JonesTrading.
Registered Direct Offering
On June 4, 2021, we 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 our common stock and warrants to purchase 1,538,461 shares of our common stock (the “RDO Warrants”) at an offering price of $4.875 per
share and 0.50 RDO Warrants, for gross proceeds of $15.0 million, before deducting AGP’s fees and related offering expenses in the amount of $1.1 million. The purchase agreement contains customary representations, warranties and agreements by
the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties and termination provisions.
The RDO Warrants have an exercise price of $6.09 per share, are exercisable upon the initial issuance date of June 8,
2021, and will expire five years following the initial exercise date. Subject to limited exceptions, a holder of a RDO Warrant will not have the right to exercise any portion of its RDO Warrants if the holder, together with its affiliates,
would beneficially own in excess of 4.99% (or, at the election of a holder prior to the date of issuance, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise; provided, however, that
upon prior notice to us, the holder may increase or decrease the beneficial ownership limitation, provided further that in no event shall the beneficial ownership limitation exceed 9.99%. As of June 30, 2024, 1,538,461 RDO Warrants were still
outstanding. The offering of the securities was made pursuant to our effective shelf registration statement on Form S-3.
Pre-Rexahn Merger Financing
44
Index
Opus Genetics, Inc.
Form 10-Q
Securities Purchase Agreement
On June 17, 2020, the Company, 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 directors of the Company, and one director of Rexahn, upon closing of the Rexahn Merger.
Waiver Agreements
Effective February 3, 2021, each investor that invested in the Pre-Merger Financing (each, a “Holder”)
entered into a Waiver Agreement with the Company (collectively, the “Waiver Agreements”). Pursuant to the Waiver Agreements, the Holders and the Company agreed to waive certain rights, finalize the exercise price and number of Series A Warrants and Series B Warrants, eliminate certain
financing restrictions, extend the term of certain leak-out agreements, and, in the case of certain Holders, grant certain registration rights for the shares underlying the warrants.
The Waiver Agreements provide for the permanent waiver of the full ratchet anti-dilution provisions, contained in the
Series A Warrants (as certain of the anti-dilution provisions had previously caused liability accounting treatment for the Series A Warrants). Upon the effective date of the Waiver Agreement, the Series A Warrants were reclassified to equity.
Pursuant to the Waiver Agreements, the number of shares underlying all of the Series B Warrants was fixed at 1,708,335 in
the aggregate with respect to all Holders.
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). As of June 30, 2025, 5,665,838 Series A Warrants were still outstanding.
At issuance, the Series A Warrants contained certain provisions that could have resulted in a downward
adjustment of the initial exercise price and an upward adjustment in the number of shares underlying the warrants if the Company were to have issued or sold, or made an agreement to issue or sell, any shares of common stock for a price lower than the exercise price then in effect. Pursuant
to the terms of the Waiver Agreements, these provisions are no longer in effect.
Company Convertible Notes
From May 2018 through March 2020, we issued the Company Convertible Notes for aggregate gross proceeds of $8.5 million,
inclusive of the promissory notes exchanged for Company Convertible Notes. The final closing of the Company Convertible Notes occurred on March 10, 2020. The Company Convertible Notes had an interest rate of 8% per annum. On November 4, 2020,
all of the Company’s outstanding notes were converted into 977,128 shares of the Company’s common stock in connection with the completion of the Rexahn Merger.
45
Index
Opus Genetics, Inc.
Form 10-Q
Cash Flows
The following table summarizes Opus’s cash flows for the periods indicated (in thousands):
|
For the Six Months Ended
|
||||||||
|
June 30,
|
||||||||
|
2025
|
2024
|
|||||||
|
Net cash used in operating activities
|
$
|
(19,263
|
)
|
$
|
(13,008
|
)
|
||
|
Net cash provided by (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 Flow from Operating Activities
For the six months ended June 30, 2025, cash used in operating activities of $19.3 million was attributable to a net loss of $15.6 million,
adjusted by a reclassification to financing activities related to the March 2025 financings and by non-cash net operating income of approximately $0.6 million in the aggregate, and attributed to a net change cash use of $3.1 million in Opus’s
net operating assets and liabilities. The non-cash expenses consisted principally of a fair value change in warrant and other derivative liabilities benefit of $3.7 million, partially offset by stock-based compensation of $1.8 million and an
unrealized loss on short-term investments of $2,000 and depreciation of $27,000. The reclassification to financing activities for issuance costs attributed to our liability classified warrants was $1.3 million. The change in operating assets
and liabilities was primarily attributable to a net decrease in our aggregate accounts payable and accrued expenses and by an increase in our prepaid expenses and other assets, offset in part by a decrease in our accounts receivable and
contract assets. All of the changes were attributed to fluctuations in Opus’s operating expenses and collections under the normal course of business.
For the six months ended June 30, 2024, cash used in operating activities of $13.0 million was attributable to a net loss
of $14.9 million, partially offset by $1.8 million in non-cash operating expenses and a net change cash source of $0.1 million in Opus’s net operating assets and liabilities. The non-cash expenses consisted principally of stock-based
compensation of $1.8 million and unrealized loss on short-term investments of $10,000. The change in operating assets and liabilities was primarily attributable to a slight increase in Opus’s net current liabilities, all associated with Opus’s
operations.
Cash Flow from Investing Activities
There were no sources or uses from investing activities during the periods presented.
Cash Flow from Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2025 was $21.4
million that consisted principally of gross proceeds received from the March 2025 Offering and March 2025 Private Placement of $21.5 million in the aggregate and from gross proceeds received from the ATM of $0.4 million. Both financings were
offset by issuance costs of $1.5 million in the aggregate. Lastly, we received funding of $1.0 million in connection with the RDF Agreement.
Net cash provided by financing activities during the six months ended June 30, 2024 was $3.9 million that consisted
principally of proceeds received from the 2021 ATM and Purchase Agreement, net of issuance costs, in the amount of $4.0 million, slightly offset by share repurchases for the payment of employee taxes.
Liquidity and Capital Resource Requirements
As of June 30, 2025 we had cash and cash equivalents of $32.4 million. License and collaborations revenue inception to
date was derived from a one-time non-refundable payment of $35 million, a milestone payment of $10 million, reimbursement and expected reimbursement of expenses and royalties earned under the Viatris License Agreement and, to a much lesser
degree, from license agreements with BioSense and Processa in connection with the Rexahn RX-3117 drug compound, and other reimbursement from grants. We anticipate that we will recognize revenue as we earn reimbursement for research and
development services in connection with the Viatris License Agreement and we may earn additional revenues from future potential milestone and royalty payments from the agreement with Viatris, or from other license agreements entered into in
the future; however, the attainment of milestones or level of sales required to earn royalty payments is highly uncertain for the reasons explained below.
46
Index
Opus Genetics, Inc.
Form 10-Q
To date, outside of the license and collaborations revenue referenced above, we do not expect to generate significant
revenue unless or until RYZUMVI sales become material, or regulatory approval is obtained and commercialization begins for LCA5, BEST1, other internally-developed assets or PS for additional indications. If we fail to complete the development
of LCA5, BEST1, other internally-developed assets, PS or any other product candidate we may pursue in the future in a timely manner or fail to obtain regulatory approval for any of such product candidates, our ability to generate significant
revenue would be compromised.
Through the ATM, we may offer and sell, from time to time at our sole discretion, to or through Leerink, acting as agent
and/or principal, shares of our common stock having an aggregate offering price of up to $40 million. A total of 8,006,791 shares of common stock were sold under the ATM programs since its inception for gross proceeds through June 30, 2025 in
the amount of $26.8 million.
In addition, on August 10, 2023, we entered into the Purchase Agreement with Lincoln Park, which provided that we had the
sole right, but not the obligation, to direct Lincoln Park to purchase up to $50 million of shares of our common stock, from time to time over the 30-month term of the Purchase Agreement. The Purchase Agreement was executed to compliment the
ATM. Concurrently with entering into the Purchase Agreement, we also entered into a Registration Rights Agreement with Lincoln Park, pursuant to which we agreed to register the resale of the shares of our common stock that have been and may
be issued to Lincoln Park under the Purchase Agreement pursuant to a registration statement. We filed a prospectus supplement to our Registration Statement (File No. 333-252715) on August 11, 2023 with the SEC. Per the terms of the Purchase
Agreement, we were unable to sell shares of our common stock to Lincoln Park if the sale price fell below $0.25 per share. On April 2, 2025, the Company delivered written notice to Lincoln Park of its election to terminate the Purchase
Agreement, effective as of April 3, 2025. As of the termination date, $5.2 million in net proceeds was received from the Purchase Agreement.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership
interest of our stockholders will be diluted, and the terms of these securities may include liquidation, warrants or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available, may involve
agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through future collaborations,
strategic alliances or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams or grant licenses on terms that may not be favorable to us. If we are unable to
raise additional funds through equity or debt financings or through collaborations, strategic alliances or licensing arrangements when needed, we may be required to delay, limit, reduce or terminate our product development, future
commercialization efforts, or grant rights to develop and market our product candidates that we would otherwise prefer to develop and market ourselves.
Future Capital Requirements
Pursuant to the Viatris License Agreement, our budgeted research and development expenses related to the development of
PS are fully reimbursed by Viatris. The development of LCA5, BEST1 and other internally-developed assets is subject to numerous uncertainties, and we have based these estimates on assumptions that may prove to be substantially different than
what we currently anticipate and could result in cash resources being used sooner than what we currently expect. Additionally, the process of advancing early-stage product candidates and testing product candidates in clinical trials is
costly, and the timing of progress in these clinical trials is uncertain. Our ability to successfully transition to profitability will be dependent upon achieving a level of product sales adequate to support our cost structure. We cannot give
any assurance that we will ever be profitable or generate positive cash flow from operating activities.
Contractual Obligations and Commitments
Facility Lease
We currently lease a facility under a short-term, non-cancellable agreement that expires on September 30, 2025, for a
base rent in the amount of approximately $5,500 per month.
47
Index
Opus Genetics, Inc.
Form 10-Q
Apexian Sublicense Agreement
On January 21, 2020, we entered into the Apexian Sublicense Agreement, pursuant to which we obtained exclusive worldwide
patent and other intellectual property rights that constitute a Ref-1 Inhibitor program relating to therapeutic applications to treat disorders related to ophthalmic and diabetes mellitus conditions. In connection with the Apexian Sublicense
Agreement, we issued 843,751 shares of our common stock to Apexian and certain of Apexian’s affiliates.
We agreed to make one-time milestone payments under the Apexian Sublicense Agreement for each of the first ophthalmic
indication and the first diabetes mellitus indication. These milestone payments include (i) payments for specified developmental and regulatory milestones totaling up to $11 million in the aggregate and (ii) payments for specified sales
milestones of up to $20 million in the aggregate, each of which net sales milestone payments is payable once, upon the first achievement of such milestone. Additionally, we also agreed to make royalty payments equal to a single-digit
percentage of our net sales of products covered by the patents under the Apexian Sublicense Agreement. None of the milestone or royalty payments were triggered or deemed probable as of the date of this Report.
University of Pennsylvania LCA5/RDH12 License Agreement
On June 15, 2022, Opus entered into an amended and restated license agreement (the “LCA5/RDH12 Agreement”) with the
Trustees of the University of Pennsylvania (“Penn”) pursuant to which it was granted an exclusive, royalty-bearing license to certain patents and a non-exclusive license to certain information relating to products directed towards treatment or
correction of mutation of the LCA5 or RDH12 genes. In return for these rights, we are obligated to make certain development, regulatory and commercial milestone payments up to a maximum potential aggregate amount of $2.6 million and royalty
payments on future net sales of such products. Until the Company is required to pay royalties under the LCA5/RDH2 Agreement, the Company must pay a de minimis annual license maintenance fee to Penn. We
are also obligated to make payments on any sublicense income, with such percentage depending on the stage of product development, which there was no sublicense income for any of the periods presented. As of the date of this Report, we
determined that none of the future obligations under the agreement were probable.
Iveric Asset Purchase Agreement – BEST1 and RHO Programs
On December 23, 2022, Opus entered into an asset purchase agreement with Iveric (the “Iveric Agreement”) pursuant to which
we acquired certain assets, including the BEST1 License (as defined below), relating to the BEST1 and RHO products. In return for these rights, we are obligated to make payments to Iveric upon the achievement of specified development and
commercial milestones, the maximum potential aggregate amount of such payments being $111.7 million. As of the date of this Report, we determined that none of the future obligations under the agreement were probable.
Penn and University of Florida BEST1 License Agreement
On April 10, 2019, Iveric entered into an exclusive patent license agreement (as amended, the “BEST1 License”) with Penn
and the University of Florida Research Foundation (“UF”), which agreement was assigned to Opus under the terms of the Iveric Agreement. Under the BEST1 License, Opus received exclusive patent rights and non-exclusive knowhow and data rights
with regard to products to treat diseases associated with mutations in the BEST1 gene. In return for these rights, we are obligated to make payments to Penn upon the achievement of certain clinical, regulatory and commercial milestones, the
maximum potential aggregate amount of such payments being $76.4 million. We are also obligated to make royalty payments on future net sales of licensed BEST1 products. Until the Company is required to pay royalties under the BEST1 License, the
Company must pay a de minimis annual license maintenance fee to UF and Penn. We must also make payments on any sublicense income, with such percentage depending on the stage of product development,
which there was no sublicense income during any of the periods presented. In consideration for Penn and UF’s consent to the assignment of the BEST1 License to us under the Iveric Agreement, the Company will also pay Penn a percentage of each
milestone payment that we are required to pay to Iveric under the Iveric Agreement. As of the date of this Report, we determined that none of the future obligations under the agreement were probable.
48
Index
Opus Genetics, Inc.
Form 10-Q
LCA5 VR License
On March 2, 2023, Opus entered into a non-exclusive license agreement (the “LCA5 VR License”) with Penn pursuant to which
it was granted a non-exclusive license to certain patents and copyrights relating to testing visual function using simulated living situations in individuals with visual disorders, for Opus’ use in clinical trials for the evaluation of retinal
disorder treatments caused by LCA5 mutations. In return for these rights, we are obligated to make a de minimis payment to Penn for each use of a licensed product in a clinical trial. As of the date of
this Report, the liability related to use of the licensed product was de minimis.
Penn and UF RHO License Agreement
On June 6, 2018, Iveric entered into an exclusive patent license agreement (the “RHO License”) by and between Penn and UF
pursuant to which we have exclusive patent rights and non-exclusive knowhow and data rights with regard to products to treat rhodopsin-mediated diseases as a result of the Iveric Agreement as defined above. In return for these rights, we are
obligated to make development milestone payments and royalty payments on future sales of such products. As of the date of this Report, we determined that none of the future obligations under the agreement were probable.
Massachusetts Eye and Ear Infirmary License Agreement
On November 9, 2021, Opus entered into a license agreement (the “MEEI License”) with the Massachusetts Eye and Ear
Infirmary (“MEEI”), granting an exclusive worldwide license of MEEI patents for use in the NMNAT1 program for all products and processes including the treatment of retinal disease in humans, and a non-exclusive worldwide license to
technological information. In return for these rights, we are obligated to make development milestone payments and royalty payments on future sales of such products. As of the date of this Report, we determined that none of the future
obligations under the agreement were probable.
Letter Agreement and Strategic Partnership—FFB
Under the 2025 Letter Agreement, we are required to make the remaining $300,000 payment installment on or before January 31, 2027 upon receipt
of semi-annual reports from the FFB outlining the progress being made in the Study, including visit completion status and publication plans. For more information on the terms of the 2025 Letter Agreement and related payments thereunder, see
Note 5 — Related Party Transactions in Part I, Item 1 – Financial Statements and Supplementary Data” of this Report.
RDF Agreement
On June 13, 2025, we entered into the RDF Agreement with the RDF, whose sole member is FFB, a significant stockholder of
the Company, relating to our program to develop gene therapies to treat patients impacted by retinitis pigmentosa caused by pathogenic variants in the Mer proto-oncogene tyrosine kinase (MERTK) gene.
Under the RDF Agreement, we will pay a milestone payment equal to the total amounts funded by RDF under the
RDF Agreement upon the achievement of a regulatory milestone. We will also make tiered royalty payments to RDF in low-to-mid single percentages until RDF has received aggregate royalty payments equal to 300% of the amounts funded by RDF under
the Agreement. In the event of a change of control of the Company or a sale or exclusive license of the MERTK Program, RDF will have the option to require us to buy out RDF’s interest under the Agreement for an amount equal to 100% of the
funds disbursed to us under the Agreement. For more information on the terms and related obligations under the RDF Agreement, see Note 5 —
Related Party Transactions in “Part I, Item 1 – Financial Statements and Supplementary Data” of this Report.
As of the date of this Report, we determined that none of the future obligations under the agreement were probable.
49
Index
Opus Genetics, Inc.
Form 10-Q
Other Commitments
In the course of normal operations, we enter into cancelable purchase commitments from time to time with our suppliers
for various key research, clinical and manufacturing services. The purchase commitments covered by these arrangements are subject to change based on our research and development efforts.
Other Funding Requirements
As noted above, certain of our cash requirements relate to the funding of our ongoing research and development of our
gene therapy product candidates, inclusive of any potential milestone and royalty obligations under our intellectual property licenses. See “Part I, Item 1— Business— Pipeline— Sales and Marketing—Manufacturing— Apexian Sublicense Agreement—
Review and Approval of Drugs and Biologics in the United States” in our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of design, development, pre-clinical and clinical activities that we may conduct in the
future, including expected cash expenditures required for some of those activities, to the extent we are able to estimate such costs.
Our other cash requirements within the next twelve months include accounts payable, accrued expenses, purchase
commitments and other current liabilities. Our other cash requirements greater than twelve months from various contractual obligations and commitments may include operating leases and contractual agreements with third-party service providers
for clinical research, product development, manufacturing, commercialization, supplies, payroll, equipment maintenance, and audits for periods into calendar year 2026. Refer to Note 3 – Commitments and Contingencies included in Part 1, Item 1
– “Financial Statements” of this Report for further detail of our lease obligation and license agreements with regard to the timing of expected future payments.
We expect to satisfy our short-term and long-term obligations through cash on hand, from future equity and debt
financings, and from reimbursement payments, potential milestone and royalty payments under the Viatris License Agreement and any future collaborations and license agreements, until we generate an adequate level of revenue from commercial
sales to cover expenses, if ever.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with U.S. GAAP. These accounting principles require us to make
estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented. We believe that the
estimates and judgments upon which we rely are reasonably based upon information available to us at the time that we make these estimates and judgments. To the extent that there are material differences between these estimates and actual
results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial
results are described below.
Our significant accounting policies are discussed in Note 1 — Company Description and Summary of Significant
Accounting Policies, included in “Part I, Item 1 – Financial Statements and Supplementary Data” of this Report. We believe that the following accounting policies and estimates are the most critical
to aid in fully understanding and evaluating our reported financial results. These estimates require our most difficult, subjective, or complex judgments because they relate to matters that are inherently uncertain. We have reviewed these
critical accounting policies and estimates and related disclosures with the Audit Committee of our Board. We have not made any material changes to date, nor do we believe there is a reasonable likelihood of a material future change to the
accounting methodologies for the areas described below.
50
Index
Opus Genetics, Inc.
Form 10-Q
License and Collaborations Revenue
We account for license and collaborations revenue in accordance with the provisions of the Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The guidance provides a unified model to determine how revenue is recognized. We have entered into
license and collaboration agreements which have revenue recognition implications. We recognize license and collaborations revenue by first allocating the transaction price of a contract to each performance obligation under the contract based
on its stand-alone price. The stand-alone price of each performance obligation is based on its fair value utilizing a discounted cash flow approach, taking into consideration assumptions, including projected worldwide net profit for each of
the respective programs based on probability assessments, projections based on internal forecasts, industry data, and information from other guideline companies within the same industry and other relevant factors. We do not expect to have in
the future significant variable consideration adjustments related to our existing license and collaborations revenue recognized. For discussion about the determination of license and collaborations revenue, see Note 10 — License and
Collaboration Agreements included in Part 1, Item 1 – “Financial Statements” of this Report.
Income Tax Assets and Liabilities
A full valuation allowance has been provided on our net deferred tax assets given the uncertainty of future
taxable income and other related factors impacting the realizability of our remaining net deferred tax assets. For additional information, see Note 12 — Income Taxes included in “Part II, Item 8 – Financial Statements and Supplementary
Data” in our Annual Report filed on Form 10-K for the year ended December 31, 2024, and see Note 12 — Income Taxes included in “Part 1, Item 1 – Financial Statements” of this Report.
Recent Accounting Pronouncements
Refer to Note 1— “Company Description and Summary of Significant Accounting Policies” to our condensed consolidated financial statements
included in “Part 1, Item 1 – Financial Statements” in this Report for a discussion of recently issued accounting pronouncements.
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Not applicable for smaller reporting companies.
| Item 4. |
Controls and Procedures
|
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in our Exchange Act
reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and
principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
We designed and evaluated our disclosure controls and procedures recognizing that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance and not absolute assurance of achieving the desired control objectives. Also, the design of a control system must reflect the fact that there are resource constraints and that the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all
control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of
any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
51
Index
Opus Genetics, Inc.
Form 10-Q
Under the supervision of and with the participation of our management, including our principal executive officer and principal financial
officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15(d)- 15(e) promulgated under the Exchange Act as of June 30, 2025. Based on this evaluation, our principal
executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2025.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter
ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
| Item 1. |
Legal Proceedings
|
From time to time, we may be involved in
various claims and legal proceedings relating to claims arising out of our operations. We are not currently a party to any legal proceedings that, in the opinion of our management, are likely to materially affect our business or financial
results. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
| Item 1A. |
Risk Factors
|
Other than as set forth below, there have been no material changes in our risk factors previously disclosed in Part I, Item 1A “Risk Factors” in
our Annual Report on Form 10-K for the year ended December 31, 2024. You should carefully consider the risks and uncertainties described below and therein.
If we fail to comply with the continued listing standards of the Nasdaq Capital Market, our common stock may be delisted,
and our ability to access the capital markets could be negatively impacted.
Our common stock is listed for trading on the Nasdaq Capital Market (“Nasdaq”). In order to maintain our listing, we must satisfy Nasdaq’s
continued listing requirements. Nasdaq Listing Rules require that the closing price of our common stock generally remains at or above $1.00 per share (the “Minimum Bid Price Requirement”). The closing price of our common stock has recently
traded below $1.00, and may fall below $1.00 per share in the future. If our common stock closes at a price below $1.00 per share for 30 consecutive business days, we could be delisted from Nasdaq. In the event we do receive notice of
deficiency from Nasdaq, we expect that applicable Nasdaq Listing Rules would provide us with an initial period of 180 calendar days to regain compliance with the Minimum Bid Price Requirement, which may be extended by Nasdaq in its discretion.
There are no assurances that we will be able to continue to comply with the Minimum Bid Price Requirement. We intend to monitor the closing
price of our common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement, which could include seeking to effect a reverse stock split. There are many factors outside of our
control that may adversely affect our minimum bid price, including those described in the “Risk Factors” section of our most recent Annual Report on Form 10-K for the year ended December 31, 2024 and in our other filings with the SEC.
Any potential delisting of our common stock from Nasdaq would likely result in decreased liquidity and increased volatility for our common stock
and may damage our reputation, adversely affecting our ability to raise additional capital or to pursue our strategic business plans. Additionally, delisting would make it more difficult for our stockholders to sell our common stock in the
public market. Further, if the Company seeks to implement a reverse stock split in order to remain listed, the announcement or implementation of such a reverse stock split could negatively affect the price of our common stock.
52
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Opus Genetics, Inc.
Form 10-Q
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
None.
| Item 3. |
Defaults Upon Senior Securities
|
None.
| Item 4. |
Mine Safety Disclosures
|
Not applicable to our Company.
| Item 5. |
Other Information
|
During the quarter ended June 30, 2025, none of the Company’s directors or officers has adopted terminated
| Item 6. |
Exhibits
|
|
EXHIBIT
|
||
|
NUMBER
|
DESCRIPTION OF DOCUMENT
|
|
|
10.1**+
|
Funding Agreement, dated as of June 13, 2025, by and between Opus Genetics, Inc. and Foundation Fighting Blindness Retinal Degeneration Fund.
|
|
|
10.2**+
|
Funding and License Agreement, dated as of July 22, 2025, by and among Opus Genetics, Inc., OpusTX, LLC, Eyes on the Future and RDH12 Fund for Sight.
|
|
| 31.1** |
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2**
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1*
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101.INS
|
Inline XBRL Instance Document.
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
| * |
Documents are furnished not filed.
|
| ** |
Indicates exhibits that are being filed herewith.
|
| + |
Portions of this exhibit have been omitted in compliance with Item 601 of Regulation S-K.
|
53
Index
Opus Genetics, Inc.
Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: August 13, 2025
Opus Genetics, Inc.
|
By:
|
/s/ George Magrath
|
|
|
George Magrath
|
||
|
Chief Executive Officer and Director
|
||
|
(Principal Executive Officer)
|
||
|
By:
|
/s/ Amy Rabourn
|
|
|
Amy Rabourn
|
||
|
Head of Financial Quality Assurance
|
||
|
(Principal Financial Officer and Accounting Officer)
|
54
FAQ
How much cash does OCUP (Opus Genetics) have on hand?
$32.4 million in cash and cash equivalents as of June 30, 2025, which management states is sufficient to fund planned expenditures for at least twelve months.
What were OCUP's revenue and net loss for the reporting period?
License and collaboration revenue was $2.882 million for the quarter and $7.252 million for the six months; net loss was $7.42 million for the quarter and $15.614 million for the six months.
What financings did OCUP complete in March 2025 and how much was raised?
March 2025 financings (public offering and private placement) produced combined gross proceeds of approximately $21.5 million and resulted in issuance of warrants recorded as a $11.8 million liability.
How many shares of common stock does OCUP have outstanding?
59,908,055 shares outstanding as of the reported shares count (August 10, 2025 stated in the filing).
Does OCUP have material contingent milestone obligations?
Yes. The filing discloses potential milestone payments under acquired licenses with maximum aggregated amounts referenced (for example up to $111.7M, $76.4M and $93.5M), but none were recorded as liabilities because achievement was not considered probable as of the reporting date.
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