Executive Summary / Key Takeaways

• OKYO Pharma is strategically re-focusing its lead drug candidate, urcosimod, on Neuropathic Corneal Pain (NCP), a debilitating condition with no FDA-approved topical therapies, following promising ocular pain reduction in earlier Dry Eye Disease (DED) trials.
• The company's innovative lipidated peptide technology, targeting the ChemR23 receptor, offers a differentiated approach to address both inflammation and pain, demonstrating a strong treatment effect in a recently completed Phase 2 NCP trial.
• Despite significant historical operating losses and a "going concern" warning, OKYO has successfully raised capital post-March 2025 and secured FDA Fast Track designation for urcosimod in NCP, accelerating its path to potential regulatory approval.
• OKYO's competitive advantage lies in being the first to conduct a clinical study for NCP, positioning it ahead of larger pharmaceutical rivals in this specific unmet medical need, though it faces substantial financial and operational resource disparities.
• Investors should closely monitor the progress of the planned 100-patient multi-center MAD trial for NCP, as successful clinical advancement and subsequent commercialization are critical to transforming the company's financial trajectory and realizing its valuation potential.

A New Horizon in Ocular Pain: OKYO Pharma's Strategic Reorientation

OKYO Pharma Limited is a clinical-stage biopharmaceutical company dedicated to developing next-generation therapeutics for inflammatory eye diseases and ocular pain. The company's core strategy revolves around targeting the G Protein-Coupled Receptor (GPCR) CMKLR1, also known as ChemR23, which is believed to play a pivotal role in the inflammatory and pain modulation pathways underlying these conditions. This focused approach aims to address significant unmet medical needs in ocular health.

OKYO Pharma's journey began in 2007, evolving through several corporate iterations before solidifying its identity as an ophthalmology-focused biopharmaceutical entity. A key historical milestone was the 2018 acquisition of intellectual property rights for urcosimod (formerly OK-101) from On Target Therapeutics (OTT) and Tufts Medical Center (TMC), establishing the foundation for its lead program. Initially, urcosimod's clinical development targeted Dry Eye Disease (DED), a common condition with several existing treatments. However, a strategic pivot in mid-2024 redirected the company's primary focus towards Neuropathic Corneal Pain (NCP), a severe and persistent ocular pain condition for which there are currently no FDA-approved topical therapies. This reorientation was driven by compelling data from the DED trial showing significant ocular pain reduction, coupled with the recognition of NCP as a major unmet medical need.

Technological Edge: Urcosimod's Differentiated Mechanism

OKYO Pharma's lead product candidate, urcosimod, is a lipidated peptide designed to specifically bind to the ChemR23 receptor, thereby blocking its role in producing ocular pain and inflammation. This dual-action mechanism is a significant technological differentiator. The company believes this approach can address both the increased inflammatory cytokines resulting from tear film imbalance and heightened neurosensory abnormalities through peripheral corneal nerve damage.

Preclinical studies have provided tangible evidence of urcosimod's benefits. In a ciliary nerve ligation mouse model of corneal neuropathic pain, topically administered urcosimod demonstrated pain-reducing activity comparable to gabapentin, a commonly used oral anticonvulsant for neuropathic pain. Crucially, urcosimod achieved this without any neurotoxic effect and did not compromise corneal epithelial integrity. The drug concentration used in these pain studies was identical to that which showed ocular anti-inflammatory activity in DED mouse models, highlighting its versatile therapeutic potential. OKYO Pharma also holds 8 issued patents and 15 pending patent applications as of June 30, 2025, covering the composition of matter for lipidated chemerin peptide analogues and novel methods of use in treating DED and other ophthalmic diseases, with expected expiration dates between 2034 and 2043. This intellectual property forms a critical competitive moat, protecting its innovative approach.

Competitive Landscape and Market Opportunity

The ophthalmic drug market is highly competitive, dominated by major multinational pharmaceutical companies, universities, and research institutions such as Novartis (NVS), AbbVie (ABBV) (Allergan), Bausch + Lomb (BLCO), and Alcon (ALC). These established players possess substantially greater financial, technical, and marketing resources. In the DED market, OKYO would face numerous approved and marketed products. However, the strategic pivot to NCP dramatically alters OKYO's competitive positioning.

NCP represents a significant market opportunity due to the complete absence of FDA-approved topical treatments. OKYO Pharma is the first company to conduct a clinical study specifically for NCP, granting it a first-mover advantage in this underserved area. While larger competitors have diversified portfolios, their focus has not yielded an approved topical solution for NCP, creating a unique window for OKYO. The company's niche strategic focus, underpinned by its proprietary technology, allows it to target this high-unmet-need segment, potentially achieving cost leadership in R&D for this specific indication and fostering stronger customer loyalty if successful. This specialized focus helps OKYO differentiate itself against rivals who may have broader but less targeted offerings for NCP.

Financial Performance and Liquidity: A Developmental Stage Profile

As a clinical-stage biopharmaceutical company, OKYO Pharma has not generated any revenue from product sales to date and does not anticipate doing so in the near future. Its financial profile reflects a company in intensive research and development. For the year ended March 31, 2025, the company reported a net loss of $4.71 million, a significant improvement from the $16.83 million loss in 2024 and $13.27 million in 2023. This reduction in net loss was primarily driven by a substantial decrease in operating expenses.

Research and development (R&D) expenses decreased significantly to $2.25 million in 2025 from $8.24 million in 2024. This reduction was a direct result of the completion of the DED clinical trial and the initiation of a smaller, less costly 48-patient clinical trial for NCP. General and administrative (G&A) expenses also saw a notable decrease, falling to $4.84 million in 2025 from $7.51 million in 2024, attributed to reductions in bonuses, D&O insurance premiums, and consultancy spend. The company also recognized a significant income tax credit of $3.26 million in 2025, stemming from R&D expenditure credits, which further mitigated its net loss.

Despite these improvements in expense management, OKYO Pharma continues to face liquidity challenges. As of March 31, 2025, cash and cash equivalents stood at $1.56 million, with a working capital deficit of approximately $5.60 million.

The company's independent registered public accounting firm has expressed "substantial doubt about our ability to continue as a going concern" post-July 2026, a common disclosure for pre-revenue biopharmaceutical firms. To address this, OKYO has historically relied on equity and debt financings, including raising an additional $2.7 million through its ATM facility subsequent to March 31, 2025. The company also secured $950,000 through convertible loan notes in late 2024 and early 2025.

Management is actively pursuing further fundraising, deferred payments, and cost reductions to ensure sufficient capital for its clinical pipeline.

Outlook and Strategic Roadmap for NCP

OKYO Pharma's outlook is firmly anchored in the accelerated development of urcosimod for NCP. The company's decision in April 2025 to close the Phase 2 NCP trial early, after 17 patients, was a strategic move to "immediately interrogate the currently masked data by unmasking the data set" and "significantly cut the time to our requesting an end-of-phase 2 meeting with FDA." This proactive approach underscores management's commitment to expediting the drug's path to market.

The positive top-line results from this 18-patient Phase 2 trial, announced on July 16, 2025, are highly encouraging. In the per-protocol population, the 0.05% urcosimod group demonstrated a mean pain score reduction of 5.50 on the Visual Analog Scale (VAS) compared to 2.75 in the placebo group. Notably, 75% of patients treated with 0.05% urcosimod achieved greater than 80% improvement in pain severity. The drug-effect size for 0.05% urcosimod, measured by Cohen-d, "demonstrated a strong treatment effect (Cohen-d value 1.20)." An interesting observation, consistent across two independent trials, is the superior efficacy of the 0.05% dose compared to the 0.10% dose, an anomaly the company is actively investigating.

Further bolstering its prospects, the FDA granted Fast Track designation to urcosimod for NCP in May 2025. This designation provides critical benefits, including more frequent interactions with the FDA, potential eligibility for Accelerated Approval and Priority Review, and a possible Rolling Review of the New Drug Application (NDA), all designed to expedite the availability of this therapy for a serious condition with unmet medical needs. Looking ahead, OKYO Pharma plans to conduct a 100-patient, multi-center, multiple-ascending-dose (MAD) trial for urcosimod in NCP, a crucial step towards its registration pathway and potential US approval.

Risks and Challenges

Investing in OKYO Pharma carries inherent risks typical of early-stage biopharmaceutical companies. The primary risk remains the high failure rate in clinical trials, where promising preclinical and early-phase results do not always translate into success in larger studies. The company's ability to generate revenue is entirely dependent on successful clinical development, regulatory approval, and subsequent commercialization, which is years away and highly uncertain.

Liquidity is another significant concern, with the "going concern" warning highlighting the continuous need for substantial additional capital. Failure to secure timely and favorable funding could force delays or even termination of development programs. Commercialization also presents barriers, including the need to build sales and marketing capabilities, manage unforeseen costs, and secure adequate pricing and reimbursement from payers. Furthermore, the company's reliance on third parties for manufacturing and clinical trials introduces risks related to quality control, regulatory compliance (cGMP, GCP), and potential supply chain disruptions. Cybersecurity threats, while common, could also materially impact operations, especially given the sensitive nature of clinical data.

Conclusion

OKYO Pharma stands at a pivotal juncture, strategically re-aligning its resources to address the significant unmet medical need of Neuropathic Corneal Pain with its lead candidate, urcosimod. The company's differentiated lipidated peptide technology, coupled with promising Phase 2 results and FDA Fast Track designation, positions it as a potential innovator in a market devoid of approved topical therapies. This strategic pivot, while concentrating risk, also amplifies the potential reward.

Despite the inherent financial challenges and the "going concern" warning, OKYO's proactive fundraising efforts and accelerated clinical development plan for NCP demonstrate a clear path forward. The planned 100-patient MAD trial will be a critical determinant of urcosimod's future. For discerning investors, OKYO Pharma represents a high-risk, high-reward opportunity, where successful execution of its technological roadmap and clinical strategy in NCP could unlock substantial value, transforming its competitive standing and long-term financial prospects.