Acer Therapeutics (ACER) 10-Q 14 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 01, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	OPEXA THERAPEUTICS, INC.
Entity Central Index Key	1,069,308
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		7,141,054
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 5,814,300	$ 12,583,764
Other current assets	224,806	498,798
Total current assets	6,039,106	13,082,562
Property & equipment, net of accumulated depreciation of $2,633,887 and $2,443,600, respectively	648,801	837,867
Other long-term assets	489,517	496,269
Total assets	7,177,424	14,416,698
Current liabilities:
Accounts payable	1,021,485	739,850
Accrued expenses	1,099,558	1,008,077
Deferred revenue	726,292	2,905,165
Notes payable - insurance	0	148,344
Total current liabilities	2,847,335	4,801,436
Total liabilities	2,847,335	4,801,436
Stockholders' equity:
Preferred stock, no par value, 10,000,000 shares authorized, none issued and outstanding	0	0
Common stock, $0.01 par value, 150,000,000 shares authorized, 7,141,054 and 6,982,909 shares issued and outstanding	71,411	69,829
Additional paid in capital	163,869,183	162,884,919
Accumulated deficit	(159,610,505)	(153,339,486)
Total stockholders' equity	4,330,089	9,615,262
Total liabilities and stockholders' equity	$ 7,177,424	$ 14,416,698

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Property & equipment, accumulated depreciation	$ 2,633,887	$ 2,443,600
Preferred stock, no par value	$ 0	$ 0
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ .01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	7,141,054	6,982,909
Common stock, shares outstanding	7,141,054	6,982,909

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Jun. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue:
Option Revenue	$ 726,291	$ 726,291	$ 2,178,873	$ 1,830,036
Research and development	2,165,728	2,420,220	5,809,730	7,853,076
General and administrative	512,727	1,023,848	2,453,557	3,375,602
Loss on disposition of assets	0	1,167	0	1,167
Depreciation and amortization	52,045	89,018	190,287	280,003
Operating loss	(2,004,209)	(2,807,962)	(6,274,701)	(9,679,812)
Interest income, net	686	2,222	1,208	5,290
Other income and expense, net	(2,381)	11,760	2,474	32,781
Net loss	$ (2,005,904)	$ (2,793,980)	$ (6,271,019)	$ (9,641,741)
Basic and diluted loss per share	$ (0.28)	$ (0.42)	$ (0.89)	$ (1.75)
Weighted average shares outstanding - Basic and diluted	7,073,703	6,709,251	7,017,638	5,498,228

Consolidated Statements of Chan

Consolidated Statements of Changes in Stockholders' Equity - 9 months ended Sep. 30, 2016 - USD ($)	Common Stock [Member]	Additional Paid In Capital [Member]	Accumulated Deficit [Member]	Total
Beginning Balance, Shares at Dec. 31, 2015	6,982,909
Beginning Balance, Amount at Dec. 31, 2015	$ 69,829	$ 162,884,919	$ (153,339,486)	$ 9,615,262
Shares issued for services, Shares	77,460
Shares issued for services, Amount	$ 775	164,215	0	(164,990)
Common stock sold for cash, Shares	66,184
Common stock sold for cash, Amount	$ 662	276,250	0	276,912
Exercise of warrants, Shares	14,501
Exercise of warrants, Amount	$ 145	57,840	0	57,985
Option expense		485,959		485,959
Net loss			(6,271,019)	(6,271,019)
Ending Balance, Shares at Sep. 30, 2016	7,141,054
Ending Balance, Amount at Sep. 30, 2016	$ 71,411	$ 163,869,183	$ (159,610,505)	$ 4,330,089

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net loss	$ (6,271,019)	$ (9,641,741)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Shares issued for services	164,990	66,963
Depreciation	190,287	280,003
Loss on disposition of equipment	0	1,167
Option expense	485,959	661,369
Changes in:
Other current assets	356,757	429,620
Accounts payable	278,562	315,685
Accrued expenses	91,481	(157,964)
Deferred revenue	(2,178,873)	1,169,964
Other long-term assets	6,752	29,205
Net cash used in operating activities	(6,875,104)	(6,845,729)
Cash flows from investing activities
Purchase of property & equipment	(1,221)	(69,944)
Net cash used in investing activities	(1,221)	(69,944)
Cash flows from financing activities
Common stock and warrants sold for cash, net of offering costs	276,912	12,602,418
Cash generated from exercise of warrants	57,985	4,410
Cash paid for fractional shares	0	(5,028)
Note payable - insurance	(148,344)	0
Payment of deferred offering costs	(79,692)	0
Net cash provided by financing activities	106,861	12,601,800
Net change in cash and cash equivalents	(6,769,464)	5,686,127
Cash and cash equivalents at beginning of period	12,583,764	9,906,373
Cash and cash equivalents at end of period	5,814,300	15,592,500
Cash paid for:
Interest	2,352	50
NON-CASH TRANSACTIONS
Unpaid deferred offering costs	$ 3,073	$ 0

1. Basis of Presentation and Go

1. Basis of Presentation and Going Concern	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Basis of Presentation and Going Concern	The accompanying interim unaudited consolidated financial statements of Opexa Therapeutics, Inc. (“Opexa” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in Opexa’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements that would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year as reported in Form 10-K have been omitted. The accompanying consolidated financial statements include the accounts of Opexa and its wholly owned subsidiary, Opexa Hong Kong Limited (“Opexa Hong Kong”). All intercompany balances and transactions have been eliminated in the consolidation. The accompanying unaudited consolidated financial statements for the nine months ended September 30, 2016 have been prepared assuming that the Company will continue as a going concern, meaning the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. As of September 30, 2016, the Company had cash and cash equivalents of $5.8 million as well as accounts payable and accrued expenses aggregating $2.1 million. While the Company recognizes revenue related to the $5 million and $3 million payments from Merck received in February 2013 and March 2015 in connection with the Option and License Agreement and the Amendment over the exclusive option period based on the expected completion term of the Company’s Phase IIb clinical trial (“Abili-T”) of Tcelna® in patients with secondary progressive multiple sclerosis (“SPMS”), the Company does not currently generate any commercial revenues resulting in cash receipts, nor does it expect to generate revenues during the remainder of 2016 resulting in cash receipts. The Company’s burn rate during the nine months ended September 30, 2016 was approximately $765,000 per month, thereby creating substantial doubt about the Company’s ability to continue as a going concern. Subsequent to quarter-end, on October 28, 2016, the Company announced that the Abili-T trial did not meet its primary or secondary endpoints. The Company implemented a reduction in workforce of 40% of its then 20 full-time employees, announced on November 2, 2016, while the Company reevaluates its programs and various strategic alternatives in light of the negative Abili-T study data. The Company anticipates further restructuring by the end of 2016 to conserve cash resources. The Company is currently analyzing the complete data set from the Abili-T trial. The Company is also conducting a review of its other research and development programs, including the preclinical program for OPX-212 in NMO, to assess the viability of continuing to pursue one or more of these programs. The Company cannot predict its future cash needs until it completes this analysis. Based on the top-line results from the Abili-T trial, however, it is unlikely that the Company will continue with development of Tcelna. Additionally, costs associated with completing the Abili-T trial and implementing restructuring of the Company’s work force may result in an increase in the monthly operating cash burn during the remainder of 2016. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company continues to explore potential opportunities and alternatives to obtain the additional resources that will be necessary to support its ongoing operations through and beyond the next 12 months including raising additional capital through either private or public equity or debt financing as well as using its at-the-market offering program and cutting expenses where possible. However, in light of the disappointing Abili-T study results, there can be no assurance that the Company will be able to secure additional funds and that if such funds are available, whether the terms or conditions would be acceptable to the Company.

2. Significant Accounting Polic

2. Significant Accounting Polices	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Significant Accounting Polices	Revenue Recognition. On February 4, 2013, Opexa entered into an Option and License Agreement (the “Merck Serono Agreement”) with Ares Trading SA (“Merck Serono”), a wholly owned subsidiary of Merck Serono S.A. Pursuant to the terms, Merck Serono has an option (the “Option”) to acquire an exclusive, worldwide (excluding Japan) license of Opexa’s Tcelna program for the treatment of multiple sclerosis (“MS”). The Option may be exercised by Merck Serono prior to or upon Opexa’s completion of the Phase IIb Trial. Opexa received an upfront payment of $5 million for granting the Option. Opexa recognized revenues from nonrefundable, up-front $5 million Option fees related to the Merck Serono Agreement on a straight-line basis over the estimated Option exercise period which coincides with the expected completion term of the Abili-T clinical trial in SPMS. If the Option is exercised despite the disappointing results of the Abili-T study, Merck Serono would pay the Company an upfront license fee of $25 million unless Merck Serono is unable to advance directly into a Phase III clinical trial of Tcelna for SPMS without a further Phase II clinical trial (as determined by Merck Serono), in which event the upfront license fee would be $15 million. After exercising the Option, Merck Serono would be solely responsible for funding development, regulatory and commercialization activities for Tcelna in MS, although the Company would retain an option to co-fund certain development in exchange for increased royalty rates. The Company would also retain rights to Tcelna in Japan, certain rights with respect to the manufacture of Tcelna, and rights outside of MS. On March 9, 2015 Opexa entered into a First Amendment of Option and License Agreement with Merck Serono, to amend the Merck Serono Agreement (the “Merck Serono Amendment”). Opexa received $3 million in consideration for the following: (i) Creating a detailed plan for potential Phase III development of Tcelna (the “Pre-Phase III Plan”), including documenting all of the activities necessary for laboratory facilities both in the U.S. and Europe to reach operational readiness by the end of December 2016. The Joint Steering Committee (“JSC”) established pursuant to the Merck Serono Agreement will be responsible for reviewing, approving and ultimately overseeing Opexa’s completion of the Pre-Phase III Plan. In the event the JSC has not approved the Pre-Phase III Plan prior to the end of the period in the Merck Serono Agreement within which Merck Serono may exercise its Option, such period will be extended for 60 days following approval of the Pre Phase III Plan by the JSC. (ii) Providing Merck Serono with updates and analysis on a blinded basis, grouped in patient batches according to Opexa’s analysis timetable, on the progress of Opexa’s immune monitoring program being conducted in conjunction with the ongoing Abili-T clinical trial. Opexa evaluated the Merck Serono Amendment and determined that the $3 million payment from Merck Serono has stand-alone value. Opexa’s continuing performance obligations in connection with the $3 million payment include the creation of the Pre-Phase III Plan and delivery of updates and analysis relating to Opexa’s immune monitoring program. As a stand-alone value term in the Merck Serono Amendment, the $3 million payment is determined to be a single unit of accounting, and is recognized as revenue on a straight-line basis over the period equivalent to the expected completion of the Pre-Phase III Plan in December 2016. Opexa includes the unrecognized portion of the $5 million Option payment and the $3 million amendment payment as deferred revenue on its consolidated balance sheets. Cash and Cash Equivalents. Opexa primarily maintains cash balances on deposit in accounts at a U.S.-based financial institution. The aggregate cash balance on deposit in these accounts is insured by the Federal Deposit Insurance Corporation up to $250,000. Opexa’s cash balances on deposit in these accounts may, at times, exceed the federally insured limits. Opexa has not experienced any losses in such accounts. As of September 30, 2016, Opexa had approximately $4.9 million in a savings account. For the nine months ended September 30, 2016, the savings account recognized an average market yield of 0.06%. Interest income of $3,561 was recognized for the nine months ended September 30, 2016 in the consolidated statements of operations.

3. Other Current Assets

3. Other Current Assets	9 Months Ended
	Sep. 30, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other Current Assets	Other current assets consisted of the following at September 30, 2016 and December 31, 2015: Description September 30, 2016 December 31, 2015 Deferred offering costs $ 111,641 $ 28,876 Prepaid expense 113,165 469,922 Total Other Current Assets $ 224,806 $ 498,798 Deferred offering costs at September 30, 2016 and December 31, 2015 were $111,641 and $28,876 respectively. The September 30, 2016 balance includes costs incurred from third parties in connection with the March 25, 2016 implementation of a new Sales Agreement (“ATM Agreement”) with IFS Securities, Inc. (doing business as Brinson Patrick, a division of IFS Securities, Inc.) as sales agent, pursuant to which Opexa can offer and sell shares of common stock from time to time depending upon market demand, in transactions deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933. These are included in other current assets in the consolidated balance sheets. Upon the sales of shares of common stock under the ATM Agreement, these capitalized costs will be offset against the proceeds of such sales of shares of common stock and recorded in additional paid in capital. As of September 30, 2016, $7,626 of deferred offering costs were recorded in additional paid in capital. Prepaid expenses at September 30, 2016 and December 31, 2015 include costs incurred from third parties in connection with the Merck Serono Agreement (see Note 2). As of September 30, 2016, the remaining costs of $9,733 in connection with the Merck Serono Agreement are expected to be amortized over the upcoming 3-month period. Also included in prepaid expenses at September 30, 2016 and December 31, 2015 is an advance to Pharmaceutical Research Associates, Inc. (“PRA”), a contract research organization providing services to Opexa with respect to the Abili-T study, in the amount of $45,365 and $45,365 respectively, as well as $0 and $31,250 remaining from a prior payment to PRA of $75,000 upon execution of an amendment to Opexa’s agreement with PRA. The remaining balance of Opexa’s NASDAQ Capital Market All-Inclusive Annual Fee of $13,750 is also included in the September 30, 2016 prepaid expenses balance. Prepaid insurance in the amount of $5,970 is included in prepaid expenses at September 30, 2016. The remaining balances are attributable to various service and maintenance contracts.

4. Other Long Term Assets

4. Other Long Term Assets	9 Months Ended
	Sep. 30, 2016
Other Long Term Assets
Other Long Term Assets	Other long term assets consists solely of a single custom reagent that is available to be used for the development of the Company’s product candidate OPX-212 for neuromyelitis optica (“NMO”), other Pre-Phase III research activities or potentially for other treatment options or autoimmune diseases utilizing the T-cell technology platform. Upon consumption, the costs of this reagent are amortized to research and development expenses in the consolidated statements of operations.

5. Equity

5. Equity	9 Months Ended
	Sep. 30, 2016
Equity [Abstract]
Equity	For the nine months ended September 30, 2016, equity related transactions were as follows: On March 14, 2016, Opexa entered into an amendment to the September 1, 2015 Stock Purchase Agreement with the purchasers party thereto, to extend by nine months the original dates for the milestones relating to the subsequent tranches. As part of the amendment, the expiration date of the Series N warrants issued pursuant to the Stock Purchase Agreement was also extended from April 9, 2018 to October 9, 2018. The Company determined that there is no accounting impact to the modification of the Series N warrants since these are investor warrants. On May 16, 2016, a total of 103,280 shares of common stock with an aggregate fair value of $219,986 were granted to certain non-employee directors for service on Opexa’s Board of Directors. Of these common stock awards, 25% vest immediately and 25% on each of June 30, 2016, September 30, 2016 and December 31, 2016 respectively, assuming continued Board service through each such date as applicable. The total expense recognized for the nine months ended September 30, 2016 was $164,990. In June 2016, Opexa issued 14,501 shares of common stock upon the exercise of Series M warrants for net proceeds of $57,985 collected on July 5, 2016. From August 17, 2016 through September 13, 2016, Opexa sold an aggregate of 66,184 shares of common stock under the ATM facility, with the new Sales Agreement entered into with IFS Securities, Inc. (doing business as Brinson Patrick, a division of IFS Securities, Inc.). Gross and net proceeds, including amortization of deferred offering costs, were $293,345 and $276,912, respectively. The average share price ranged from $4.12 to $4.73 per share. These sales settled and shares were issued by September 30, 2016. The shelf registration statement and the offering prospectus relating to the ATM facility must be kept current in order to use the program to sell shares of common stock in the future.

6. Stock-Based Compensation

6. Stock-Based Compensation	9 Months Ended
	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	Opexa accounts for stock-based compensation, including options and nonvested shares, according to the provisions of FASB ASC 718, "Share Based Payment.” During the nine months ended September 30, 2016, Opexa recognized stock-based compensation expense of $485,959. Unamortized stock-based compensation expense as of September 30, 2016 amounted to $1,877,706. Stock Option Activity A summary of stock option activity for the nine months ended September 30, 2016 is presented below: Number of Shares Weighted Avg. Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Outstanding at December 31, 2015 417,404 $ 18.04 Granted 290,000 2.41 Exercised — — Forfeited and canceled (36,751 ) 28.61 Outstanding at September 30, 2016 670,653 $ 10.70 8.53 $ 258,169 Exercisable at September 30, 2016 338,876 $ 15.31 7.23 $ 65,000 Employee Options and Non-Employee Options Option awards are granted with an exercise price equal to the market price of Opexa’s stock at the date of issuance, generally have a ten-year life, and have various vesting dates that range from no vesting or partial vesting upon date of grant to full vesting on a specified date. Opexa estimates the fair value of stock options using the Black-Scholes option-pricing model and records the compensation expense ratably over the service period. Opexa recognized stock based compensation expense of $485,959 and $661,369 during the nine months ended September 30, 2016 and 2015, respectively, for grants made to employees. On May 16, 2016, Opexa’s shareholders approved an amendment and restatement of the 2010 Stock Incentive Plan (the “2010 Plan”) to increase the number of shares of common stock reserved for issuance by an additional 650,000 shares and to reset the number of stock-based awards issuable to a participant in any calendar year. As of September 30, 2016 a maximum of 380,101 options to purchase shares of common stock are available for future grants. On May 16, 2016, time-based options to purchase an aggregate of 200,000 shares at an exercise price of $2.13 were granted to various officers and employees. These options have a term of ten years and become exercisable over a three-year period, with 25% vesting on the grant date and the remaining 75% vesting in equal increments quarterly thereafter (in arrears) over the ensuing three years, subject to continuous service or termination of employment without cause. The fair value of these options of $384,501 was calculated using the Black-Scholes option pricing model. Variables used in the Black-Scholes option model for these options include (1) discount rate of 1.75% (2) expected term of 5.56 years (3) expected volatility rate of 138.59% and (4) zero expected dividends. On May 16, 2016, a performance-based option to purchase 50,000 shares of common stock at an exercise price of $2.13 was granted to the Chief Executive Officer. This option vests in full if, on or before December 31, 2016, Merck Serono exercises its Option to acquire an exclusive, worldwide (excluding Japan) license to Opexa’s Tcelna program for the treatment of multiple sclerosis under that certain Option and License Agreement between Opexa and Merck Serono dated February 4, 2013. The fair value of this milestone option is $105,721 and was calculated using the Black-Scholes option pricing model. Variables used in the Black-Scholes option model for these options include (1) discount rate of 1.75% (2) expected term of 10 years (3) expected volatility rate of 167.77% and (4) zero expected dividends. On August 16, 2016, time-based options to purchase an aggregate of 40,000 shares at an exercise price of $4.13 were granted to various employees. These options have a term of ten years and become exercisable over a three-year period, with 25% vesting on the grant date and the remaining 75% vesting in equal increments quarterly thereafter (in arrears) over the ensuing three years, subject to continuous service or termination of employment without cause. The fair value of these options of $148,557 was calculated using the Black-Scholes option pricing model. Variables used in the Black-Scholes option model for these options include (1) discount rate of 1.57% (2) expected term of 5.56 years (3) expected volatility rate of 137.40% and (4) zero expected dividends. In addition, during the nine months ended September 30, 2016 there were 36,751 shares underlying options that were forfeited and cancelled. Warrant Activity A summary of warrant activity for the nine months ended September 30, 2016 is presented below: Number of Shares Weighted Avg. Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Outstanding at December 31, 2015 3,662,954 $ 6.30 Granted — Exercised (14,501 ) 4.00 Forfeited and canceled (51,823 ) 83.52 Outstanding at September 30, 2016 3,596,630 $ 12.39 1.46 $ — Exercisable at September 30, 2016 3,596,630 $ 12.39 1.46 $ — In connection with the amended stock purchase agreement entered in on March 14, 2016 (See Note 5), the Company also amended and restated the Series N Warrants to purchase shares of the Company’s common stock previously issued to the Purchasers, and extend the expiration date of the Series N Warrants by nine months (i.e., from April 9, 2018 to October 9, 2018). The Company determined that there is no accounting impact to the modification of the Series N warrants since these are investor warrants. In June 2016, Opexa issued 14,501 shares of common stock upon the exercise of Series M warrants for net proceeds of $57,985 collected on July 5, 2016. During the nine months ended September 30, 2016, 51,823 warrants were forfeited and canceled.

7. Subsequent Events

7. Subsequent Events	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	Results of Phase IIb Abili-T Clinical Trial for Tcelna in SPMS On October 28, 2016, the Company announced that its Abili-T clinical trial designed to evaluate the efficacy and safety of Tcelna (imilecleucel-T) in patients with SPMS did not meet its primary endpoint of reduction in brain volume change (atrophy), nor did it meet the secondary endpoint of reduction of the rate of sustained disease progression. Reduction in Force In light of the Abili-T trial results, on November 2, 2016, the Company announced that its board of directors had approved a 40% reduction of the Company’s current full-time workforce of 20 employees in order to reduce operating expenses and conserve cash resources. The Company estimates that it will incur incremental aggregate cash charges of approximately $95,000 associated with this workforce reduction. The Company expects further restructuring by the end of 2016 to conserve cash resources.

2. Significant Accounting Pol14

2. Significant Accounting Polices (Policies)	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Revenue Recognition	Opexa recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“FASB ASC”) 605, “Revenue Recognition.” ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) consideration is fixed or determinable; and (4) collectability is reasonably assured. On February 4, 2013, Opexa entered into an Option and License Agreement (the “Merck Serono Agreement”) with Ares Trading SA (“Merck Serono”), a wholly owned subsidiary of Merck Serono S.A. Pursuant to the terms, Merck Serono has an option (the “Option”) to acquire an exclusive, worldwide (excluding Japan) license of Opexa’s Tcelna program for the treatment of multiple sclerosis (“MS”). The Option may be exercised by Merck Serono prior to or upon Opexa’s completion of the Phase IIb Trial. Opexa received an upfront payment of $5 million for granting the Option. Opexa recognized revenues from nonrefundable, up-front $5 million Option fees related to the Merck Serono Agreement on a straight-line basis over the estimated Option exercise period which coincides with the expected completion term of the Abili-T clinical trial in SPMS. If the Option is exercised despite the disappointing results of the Abili-T study, Merck Serono would pay the Company an upfront license fee of $25 million unless Merck Serono is unable to advance directly into a Phase III clinical trial of Tcelna for SPMS without a further Phase II clinical trial (as determined by Merck Serono), in which event the upfront license fee would be $15 million. After exercising the Option, Merck Serono would be solely responsible for funding development, regulatory and commercialization activities for Tcelna in MS, although the Company would retain an option to co-fund certain development in exchange for increased royalty rates. The Company would also retain rights to Tcelna in Japan, certain rights with respect to the manufacture of Tcelna, and rights outside of MS. On March 9, 2015 Opexa entered into a First Amendment of Option and License Agreement with Merck Serono, to amend the Merck Serono Agreement (the “Merck Serono Amendment”). Opexa received $3 million in consideration for the following: (i) Creating a detailed plan for potential Phase III development of Tcelna (the “Pre-Phase III Plan”), including documenting all of the activities necessary for laboratory facilities both in the U.S. and Europe to reach operational readiness by the end of December 2016. The Joint Steering Committee (“JSC”) established pursuant to the Merck Serono Agreement will be responsible for reviewing, approving and ultimately overseeing Opexa’s completion of the Pre-Phase III Plan. In the event the JSC has not approved the Pre-Phase III Plan prior to the end of the period in the Merck Serono Agreement within which Merck Serono may exercise its Option, such period will be extended for 60 days following approval of the Pre Phase III Plan by the JSC. (ii) Providing Merck Serono with updates and analysis on a blinded basis, grouped in patient batches according to Opexa’s analysis timetable, on the progress of Opexa’s immune monitoring program being conducted in conjunction with the ongoing Abili-T clinical trial. Opexa evaluated the Merck Serono Amendment and determined that the $3 million payment from Merck Serono has stand-alone value. Opexa’s continuing performance obligations in connection with the $3 million payment include the creation of the Pre-Phase III Plan and delivery of updates and analysis relating to Opexa’s immune monitoring program. As a stand-alone value term in the Merck Serono Amendment, the $3 million payment is determined to be a single unit of accounting, and is recognized as revenue on a straight-line basis over the period equivalent to the expected completion of the Pre-Phase III Plan in December 2016. Opexa includes the unrecognized portion of the $5 million Option payment and the $3 million amendment payment as deferred revenue on its consolidated balance sheets.
Cash and Cash Equivalents	Opexa considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. Investments with maturities in excess of three months but less than one year are classified as short-term investments and are stated at fair market value. Opexa primarily maintains cash balances on deposit in accounts at a U.S.-based financial institution. The aggregate cash balance on deposit in these accounts is insured by the Federal Deposit Insurance Corporation up to $250,000. Opexa’s cash balances on deposit in these accounts may, at times, exceed the federally insured limits. Opexa has not experienced any losses in such accounts. As of September 30, 2016, Opexa had approximately $4.9 million in a savings account. For the nine months ended September 30, 2016, the savings account recognized an average market yield of 0.06%. Interest income of $3,561 was recognized for the nine months ended September 30, 2016 in the consolidated statements of operations.

3. Other Current Assets (Tables

3. Other Current Assets (Tables)	9 Months Ended
	Sep. 30, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Other Current Assets	Other current assets consisted of the following at September 30, 2016 and December 31, 2015: Description September 30, 2016 December 31, 2015 Deferred offering costs $ 111,641 $ 28,876 Prepaid expense 113,165 469,922 Total Other Current Assets $ 224,806 $ 498,798

6. Stock-Based Compensation (Ta

6. Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Option Activity	Number of Shares Weighted Avg. Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Outstanding at December 31, 2015 417,404 $ 18.04 Granted 290,000 2.41 Exercised — — Forfeited and canceled (36,751 ) 28.61 Outstanding at September 30, 2016 670,653 $ 10.70 8.53 $ 258,169 Exercisable at September 30, 2016 338,876 $ 15.31 7.23 $ 65,000
Warrant Activity	Number of Shares Weighted Avg. Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Outstanding at December 31, 2015 3,662,954 $ 6.30 Granted — Exercised (14,501 ) 4.00 Forfeited and canceled (51,823 ) 83.52 Outstanding at September 30, 2016 3,596,630 $ 12.39 1.46 $ — Exercisable at September 30, 2016 3,596,630 $ 12.39 1.46 $ —

2. Significant Accounting Pol17

2. Significant Accounting Polices (Details)	9 Months Ended
	Sep. 30, 2016USD ($)
Significant Accounting Polices Details
Cash in savings account	$ 4,900,000
Interest income	$ 3,561

3. Other Current Assets (Detail

3. Other Current Assets (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deferred offering costs	$ 111,641	$ 28,876
Prepaid expenses	113,165	469,922
Total Other Current Assets	$ 224,806	$ 498,798

3. Other Current Assets (Deta19

3. Other Current Assets (Details Narrative) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Deferred offering costs	$ 111,641	$ 28,876
Merck Serono Agreement
Advance payments to vendors and consultants	9,733
Pharmaceutical Research Associates, Inc
Advance payments to vendors and consultants	45,365	45,365
Remaining Balance From Prior Payment To Pharmaceutical Research Associates, Inc.
Advance payments to vendors and consultants	$ 0	$ 31,250

6. Stock-Based Compensation (De

6. Stock-Based Compensation (Details)	9 Months Ended
	Sep. 30, 2016USD ($)$ / sharesshares
Options
Number of Shares, Outstanding at beginning of period | shares	417,404
Options, Granted | shares	290,000
Options, Exercised | shares	0
Options, Forfeited and canceled | shares	(36,751)
Number of Shares, Outstanding at end of period | shares	670,653
Number of Shares, Exercisable at end of period | shares	338,876
Weighted Average Exercise Price, Options
Weighted average exercise price, Outstanding at beginning of period | $ / shares	$ 18.04
Weighted average exercise price options, Granted | $ / shares	2.41
Weighted average exercise price options, Exercised | $ / shares	0
Weighted average exercise price options, Forfeited and canceled | $ / shares	28.61
Weighted average exercise price, Outstanding at end of period | $ / shares	10.70
Weighted average exercise price, Exercisable at end of period | $ / shares	$ 15.31
Weighted Average Remaining Contract Term, Options
Weighted Average Remaining Contract Term, Outstanding at end of period	8 years 6 months 11 days
Weighted Average Remaining Contract Term, Exercisable	7 years 2 months 23 days
Intrinsic Value, Options
Outstanding Aggregate Intrinsic Value, end of period | $	$ 258,169
Exercisable Aggregate Intrinsic Value | $	$ 65,000

6. Stock-Based Compensation (21

6. Stock-Based Compensation (Details 1) - Warrants	9 Months Ended
	Sep. 30, 2016USD ($)$ / sharesshares
Class of Warrant or Right [Line Items]
Number of Shares, Outstanding at beginning of period | shares	3,662,954
Warrants, Granted | shares	0
Warrants, Exercised | shares	(14,501)
Warrants, Forfeited and canceled | shares	(51,823)
Number of Shares, Outstanding at end of period | shares	3,596,630
Number of Shares, Exercisable at end of period | shares	3,596,630
Weighted Average Exercise Price, Warrants
Weighted average exercise price, Outstanding at beginning of period | $ / shares	$ 6.30
Weighted average exercise price warrants, Granted | $ / shares	0
Weighted average exercise price warrants, Exercised | $ / shares	4
Weighted average exercise price warrants, Forfeited and canceled | $ / shares	83.52
Weighted average exercise price, Outstanding at end of period | $ / shares	12.39
Weighted average exercise price, Exercisable at end of period | $ / shares	$ 12.39
Weighted Average Remaining Contract Term, Warrants
Weighted Average Remaining Contract Term, Outstanding at end of period	1 year 5 months 16 days
Weighted Average Remaining Contract Term, Exercisable	1 year 5 months 16 days
Intrinsic Value, Warrants
Outstanding Aggregate Intrinsic Value, End of period | $	$ 0
Exercisable Aggregate Intrinsic Value | $	$ 0

6. Stock-Based Compensation (22

6. Stock-Based Compensation (Details Narrative)	9 Months Ended
	Sep. 30, 2016USD ($)
Stock-based Compensation Details Narrative
Unamortized stock-based compensation expense	$ 1,877,706
Option expense	$ 485,959