Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 10, 2017 | Jun. 30, 2016 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | OPEXA THERAPEUTICS, INC. | ||
Entity Central Index Key | 1,069,308 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 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 Public Float | $ 27,500,691 | ||
Entity Common Stock, Shares Outstanding | 7,657,332 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 3,444,952 | $ 12,583,764 |
Other current assets | 371,562 | 498,798 |
Total current assets | 3,816,514 | 13,082,562 |
Property & equipment, net of accumulated depreciation of $2,443,600 and $2,099,389, respectively | 50,000 | 837,867 |
Other long-term assets | 0 | 496,269 |
Total assets | 3,866,514 | 14,416,698 |
Current liabilities: | ||
Accounts payable | 377,956 | 739,850 |
Accrued expenses | 625,890 | 1,008,077 |
Deferred revenue | 0 | 2,905,165 |
Notes payable - Insurance | 156,642 | 148,344 |
Total current liabilities | 1,160,488 | 4,801,436 |
Total liabilities | 1,160,488 | 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 | 163,954,215 | 162,884,919 |
Accumulated deficit | (161,319,600) | (153,339,486) |
Total stockholders' equity | 2,706,026 | 9,615,262 |
Total liabilities and stockholders' equity | $ 3,866,514 | $ 14,416,698 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Property & equipment, accumulated depreciation | $ 3,194,029 | $ 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 | $ 0.01 | $ 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 ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue: | ||
Option Revenue | $ 2,905,165 | $ 2,556,329 |
Research and development | 6,497,531 | 10,039,496 |
General and administrative | 3,122,337 | 4,258,147 |
Depreciation and amortization | 238,127 | 351,403 |
Impairment loss | 1,036,467 | 0 |
Loss on disposal of fixed assets | 2,320 | 1,167 |
Operating loss | (7,991,617) | (12,093,884) |
Interest income, net | 874 | 5,911 |
Other income and expense, net | 10,629 | 68,695 |
Net loss | $ (7,980,114) | $ (12,019,278) |
Basic and diluted loss per share | $ (1.13) | $ (2.05) |
Weighted average shares outstanding | 7,048,661 | 5,854,438 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid In Capital [Member] | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 3,529,344 | |||
Beginning Balance, Amount at Dec. 31, 2014 | $ 35,293 | $ 148,724,102 | $ (141,320,208) | $ 7,439,187 |
Shares issued for services, Shares | 13,379 | |||
Shares issued for services, Amount | $ 134 | 78,079 | 0 | 78,213 |
Cancellation of fractional shares, Shares | (1,365) | |||
Cancellation of fractional shares, Amount | $ (13) | (5,015) | 0 | (5,028) |
Shares sold for cash, Shares | 3,440,448 | |||
Shares sold for cash, Amount | $ 34,404 | 13,247,631 | 0 | 13,282,035 |
Exercise of warrants, Shares | 1,103 | |||
Exercise of warrants, Amount | $ 11 | 4,399 | 0 | 4,410 |
Option expense | 0 | 835,723 | 0 | 835,723 |
Net loss | $ 0 | 0 | (12,019,278) | (12,019,278) |
Ending Balance, Shares at Dec. 31, 2015 | 6,982,909 | |||
Ending 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 |
Cancellation of fractional shares, Amount | 0 | |||
Shares sold for cash, Shares | 66,184 | |||
Shares sold for cash, Amount | $ 662 | 276,250 | 276,912 | |
Exercise of warrants, Shares | 14,501 | |||
Exercise of warrants, Amount | $ 145 | 57,840 | 0 | 57,985 |
Option expense | 570,991 | 570,991 | ||
Net loss | (7,980,114) | (7,980,114) | ||
Ending Balance, Shares at Dec. 31, 2016 | 7,141,054 | |||
Ending Balance, Amount at Dec. 31, 2016 | $ 71,411 | $ 163,954,215 | $ (161,319,600) | $ 2,706,026 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (7,980,114) | $ (12,019,278) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Shares issued for services | 164,990 | 78,213 |
Depreciation | 238,127 | 351,403 |
Option expense | 570,991 | 835,723 |
Loss on disposal of fixed assets | 2,320 | 1,167 |
Impairment loss | 1,036,467 | 0 |
Changes in: | ||
Other current assets | 405,005 | (547,606) |
Accounts payable | (361,894) | 37,356 |
Accrued expenses | (382,187) | (41,436) |
Deferred revenue | (2,905,165) | 443,671 |
Other long-term assets | 8,440 | 535,208 |
Net cash used in operating activities | (9,203,020) | (10,325,579) |
Cash flows from investing activities | ||
Purchase of property & equipment | (1,221) | (92,333) |
Net cash provided by (used in) investing activities | (1,221) | (92,333) |
Cash flows from financing activities | ||
Common stock and warrants sold for cash, net of offering costs | 276,912 | 13,282,035 |
Cash generated from exercise of warrants | 57,985 | 4,410 |
Repurchase of fractional shares | 0 | (5,028) |
Note payable – insurance | (186,706) | (186,114) |
Payment of deferred offering cost | (82,762) | 0 |
Net cash provided by financing activities | 65,429 | 13,095,303 |
Net change in cash and cash equivalents | (9,138,812) | 2,677,391 |
Cash and cash equivalents at beginning of period | 12,583,764 | 9,906,373 |
Cash and cash equivalents at end of period | 3,444,952 | 12,583,764 |
Cash paid for: | ||
Income tax | 0 | 0 |
Interest | 3,314 | 2,315 |
NON-CASH TRANSACTIONS | ||
Insurance premium financed through issuance of notes | $ 195,004 | $ 184,787 |
1. BUSINESS OVERVIEW AND SUMMAR
1. BUSINESS OVERVIEW AND SUMMARY OF ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
BUSINESS OVERVIEW AND SUMMARY OF ACCOUNTING POLICIES | Description of Business Opexa is a biopharmaceutical company developing personalized immunotherapies with the potential to treat major illnesses, including multiple sclerosis (MS) as well as other autoimmune diseases such as neuromyelitis optica (“NMO”). These therapies are based on the Company’s proprietary T-cell technology. Information related to its product candidates, Tcelna and OPX-212, is preliminary and investigative. Tcelna and OPX-212 have not been approved by the U.S. Food and Drug Administration (FDA) or other global regulatory agencies for marketing. On October 28, 2016, the Company announced that the Abili-T trial 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. Abili-T is a 183-patient, randomized, double-blind, placebo-controlled Phase IIb study that was conducted at 35 clinical trial sites in the U.S. and Canada and designed to evaluate the safety and efficacy of Tcelna (imilecleucel-T) in patients with secondary progressive MS (SPMS). Patients in the Tcelna arm of the study received two annual courses of Tcelna treatment consisting of five subcutaneous injections per year. The Company completed enrollment of the Abili-T study in May 2014 and un-blinded the results from the study in late October 2016. Previously, in September 2008, the Company completed a Phase IIb clinical study of Tcelna in the relapsing-remitting MS (RRMS) indication. The Company operates in a highly regulated and competitive environment. The manufacturing and marketing of pharmaceutical products require approval from, and are subject to, ongoing oversight by the Food and Drug Administration, or FDA, in the United States, by the European Medicines Agency, or EMA, in the E.U. and by comparable agencies in other countries. Obtaining approval for a new therapeutic product is never certain and may take many years and may involve expenditure of substantial resources. Going Concern. Following the October 28, 2016 announcement that the Abili-T trial did not meet its primary or secondary endpoints, and in order to conserve cash resources while it reevaluated its programs and explored various strategic alternatives, during the fourth quarter of 2016 and first quarter of 2017 the Company implemented several reductions in workforce totaling 90% of its then 20 full-time employees. After further analysis of the data from the Abili-T trial, the Company has determined that it will not move forward with further studies of Tcelna in SPMS at this time and is 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 is also exploring its strategic alternatives. The Company cannot fully predict its future cash needs until it completes this analysis. 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 or, if such funds are available, whether the terms or conditions would be acceptable to the Company. Reverse Stock Split. Unless otherwise noted, impacted amounts included in the consolidated financial statements and notes thereto have been retroactively adjusted for the stock splits as if such stock splits occurred on the first day of the first period presented. Impacted amounts include shares of common stock issued and outstanding, shares underlying warrants and stock options, shares reserved, exercise prices of warrants and options, and loss per share. There was no impact on the amount of preferred or common stock authorized resulting from the 1:8 Reverse Stock Split. Principles of Consolidation. Use of Estimates in Financial Statement Preparation. Certain Risks and Concentrations. Revenue Recognition. On February 4, 2013, Opexa entered into an Option and License Agreement (the “Merck Serono Agreement”) with Merck Serono. Pursuant to the terms, Merck Serono had an option to acquire an exclusive, worldwide (excluding Japan) license of Opexa’s Tcelna® program for the treatment of MS. The option was exercisable by Merck Serono prior to or upon Opexa’s completion of its Abili-T Phase IIb clinical trial for Tcelna in patients with secondary progressive MS. Opexa received an upfront payment of $5 million for granting the option and recognized revenues from the nonrefundable, up-front option fee on a straight-line basis over the estimated option exercise period which coincided with the expected completion term of the Abili-T trial. The expected completion term for revenue recognition was December 2016. 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 certain activities to be conducted in connection with preparation for operational readiness for further clinical studies of Tcelna and for providing Merck Serono with updates and analysis with respect to Opexa’s immune monitoring program that was conducted in conjunction with the Abili-T clinical trial. Opexa evaluated the Merck Serono Amendment and determined that the $3 million payment from Merck Serono had stand-alone value due to Opexa’s performance obligations thereunder. The $3 million payment was determined to be a single unit of accounting and was recognized as revenue on a straight-line basis over the period equivalent to the expected completion of the performance obligations in December 2016. On October 28, 2016, Opexa announced that the Abili-T clinical trial designed to evaluate the efficacy and safety of Tcelna in patients with SPMS did not meet its primary or secondary endpoints. On November 23, 2016, Opexa received notice from Merck Serono that Merck Serono would not be exercising the option, and as a result of such notice, the Merck Serono Agreement automatically expired. Cash and Cash Equivalents. Supplies Inventory. Long-lived Assets. Deferred costs. Income Taxes. Stock-Based Compensation. Research and Development. Research and Development Foreign Currency Translation and Transaction Gains and Losses Foreign Currency Matters Net Loss per Share Reclassifications Recently Issued Accounting Pronouncements. |
2. CASH AND CASH EQUIVALENTS
2. CASH AND CASH EQUIVALENTS | 12 Months Ended |
Dec. 31, 2016 | |
Cash and Cash Equivalents [Abstract] | |
CASH AND CASH EQUIVALENTS | As of December 31, 2016, Opexa invested approximately $2.8 million in a savings account. For the year ended December 31, 2016, the savings account recognized an average market yield of 0.06%. Interest income of $4,188 from the savings account was recognized for the year ended December 31, 2016 in the consolidated statements of operations. |
3. OTHER CURRENT ASSETS
3. OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER CURRENT ASSETS | Other current assets consisted of the following at December 31, 2016 and 2015: Description 2016 2015 Deferred offering costs 111,641 28,876 Prepaid expenses 259,921 469,922 Total Other Current Assets $ 371,562 $ 498,798 Deferred offering costs at December 31, 2016 include $111,641 in costs incurred from third parties in connection with the renewal of the Company’s shelf registration statement. Deferred offering costs at December 31, 2015 included $28,876 in costs incurred from third parties in connection with the implementation of a $1.5 million and $15 million purchase agreement in November 2012 pursuant to which Opexa had the right (now terminated) to sell to Lincoln Park Capital Fund, LLC shares of its common stock, subject to certain conditions and limitations. As of December 31, 2015, the remaining costs of $38,938 in connection with the Merck Serono Agreement were included in other current assets (see Note 1). Such costs were amortized during 2016 and no balance remained at December 31, 2016. Also included in prepaid expenses is an advance to Pharmaceutical Research Associates, Inc. (“PRA”), a contract research organization providing services to Opexa, in the amount of $45,365 as well as $174,400 of prepaid insurance for Opexa’s directors’ and officers’ liability insurance. The remaining balance in prepaid expenses is attributable to various service and maintenance contracts. |
4. PROPERTY AND EQUIPMENT
4. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment consisted of the following at December 31, 2016 and 2015: Description Life 2016 2015 Computer equipment 3 years $ 173,147 $ 193,596 Office furniture and equipment 5-7 years 238,661 247,679 Software 3 years 125,412 125,412 Laboratory equipment 7 years 1,117,173 1,120,693 Leasehold improvements 5 years 684,515 683,295 Manufacturing equipment 7 years 905,121 910,792 Subtotal: 3,244,029 3,281,467 Less: accumulated depreciation and impairment (3,194,029 ) (2,443,600 ) Property and equipment, net $ 50,000 $ 837,867 Property and equipment is carried at cost less accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful life of three to seven years, depending upon the type of equipment, except for leasehold improvements which are amortized using the straight-line method over the remaining lease term or the life of the asset, whichever is shorter. The cost of repairs and maintenance is charged as an expense to the consolidated statements of operations as incurred. Depreciation expense totaled $238,127 and $351,403 for the years ended December 31, 2016 and 2015, respectively. In connection with the assignment of the Company’s corporate headquarters lease and sale of certain assets which was effective as of February 1, 2017 (see Note 13), and based on the consideration received being less than the carrying value of the assets, management determined it was appropriate to write-down the carrying value of the property and equipment to its recoverable value of $50,000 as of December 31, 2016. The Company recorded an impairment loss of $548,638 for the year ended December 31, 2016. |
5. OTHER LONG TERM ASSETS
5. OTHER LONG TERM ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Other Assets, Noncurrent [Abstract] | |
OTHER LONG TERM ASSETS | Other long-term assets consists solely of a single custom reagent that was available to be used for the development of the Company’s product candidate OPX-212 for 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. The custom reagent has a three-year shelf life and its expiration is November 2018. At December 31, 2016 and 2015, other long-term assets consist solely of a single custom reagent with a carrying value of $0 and $496,269, respectively, which included a 100% write-down of the asset value at December 31, 2016 to account for the uncertainty in future use of the custom reagent. |
6. NOTES PAYABLE
6. NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | Notes payable consists of a commercial insurance premium finance agreement - promissory note with AFCO of which $136,038 was outstanding as of December 31, 2016. The loan has an interest rate of 3.5% per annum and matures July 1, 2017. The second note is also a commercial insurance premium finance agreement – promissory note with AFCO of which $20,604 was outstanding as of December 31, 2016. The loan has an interest rate of 3.5% per annum and matures September 1, 2017. Payments on the above notes are due and payable monthly until maturity. |
7. INCOME TAXES
7. INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Opexa uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. At December 31, 2016 and 2015 Opexa had approximately $74 million and approximately $70 million of unused net operating losses (NOLs), respectively, available for carry forward to future years. For tax purposes, Opexa elects to capitalize research and development expenses and amortize them over a 10-year period. The unused NOLs begin to expire at December 31, 2024. At December 31, 2016 and 2015, capitalized R&D amounted to $41.2 million and $35.3 million, respectively. At December 31, 2016 and 2015, Opexa had a deferred tax asset which is covered by a full valuation allowance due to uncertainty of Opexa’s ability to generate future taxable income necessary to realize the related deferred tax asset consisting of: Deferred tax asset resulting from: December 31, 2016 December 31, 2015 Net operating loss $ 25,050,750 $ 24,806,175 Research and development tax credits 2,896,079 2,593,792 Capitalized research and development costs 13,568,440 11,900,122 Subtotal 41,515,269 39,300,089 Less valuation allowance (41,151,269 ) (39,300,089 ) Net deferred tax asset $ - $ - Opexa’s ability to utilize the NOLs is subject to the rules of Section 382 of the Internal Revenue Code. Section 382 generally restricts the use of NOLs after an “ownership change” (generally defined as a greater than 50% change (by value) in the Company’s equity ownership over a three-year period). The Section 382 limitation is applied annually and is equal to the value of Opexa’s stock on the date of the ownership change, multiplied by a designated federal long-term tax-exempt rate. At December 31, 2016, the tax returns open for examination by the Internal Revenue Service are 2013, 2014, 2015 and 2016 (not yet filed). |
8. COMMITMENTS AND CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | In October 2005, Opexa entered into a ten-year lease for its office and research facilities. The facility including the property was leased for a term of ten years with two options for an additional five years each at the then prevailing market rate. In May 2015, Opexa exercised the option for an additional five year lease. Rent expense in the consolidated statements of operations for the years ended December 31, 2016 and 2015 was approximately $203,000 and $153,000 respectively. As of December 31, 2016, the future minimum lease payments were: Year Amount 2017 200,000 2018 201,250 2019 206,250 2020 157,500 Total future minimum lease payments $ 765,000 Subsequent to December 31, 2016, Opexa entered into an Assignment and Assumption of Lease with KBI Biopharma, Inc. on February 1, 2017, pursuant to which Opexa assigned to KBI, and KBI assumed from Opexa, all of Opexa’s remaining rights and obligations under the lease for Opexa’s office and research facilities. See Note 13. |
9. SIGNIFICANT CONTRACTUAL SERV
9. SIGNIFICANT CONTRACTUAL SERVICE AND MILESTONE AGREEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Health Care Organizations [Abstract] | |
SIGNIFICANT CONTRACTUAL SERVICE AND MILESTONE AGREEMENTS | In February 2012, Opexa entered into an agreement with PRA pursuant to which PRA provides Opexa with services related to the design, implementation and management of Opexa’s Phase IIb clinical trial program in SPMS (the “PRA Agreement”). Payments by Opexa to PRA under the PRA Agreement are based on the achievement of certain time and performance milestones as presented in the PRA Agreement. Total payments to PRA during the years ended December 31, 2016 and 2015, which were charged to research and development expense on the consolidated statements of operations, amounted to $1,679,973 and $1,115,868, respectively. Unless terminated by either party without cause on 60 days prior notice or on shorter notice with cause, the initial term of the PRA Agreement is for four years and automatically renews for successive one year terms. Through December 31, 2015, Opexa entered into individual Clinical Trial Agreements with 36 Institutions and 36 principal investigators acting within their employment or agent positions within their clinical institution. Under the terms of each Clinical Trial Agreement, each of the Investigators will identify and recruit subjects with SPMS meeting certain enrollment requirements and conduct clinical research in conjunction with Opexa’s Phase IIb clinical study (Abili-T), and each of the Institutions will provide appropriate resources and facilities so the Institution’s Investigator can conduct the Abili-T study in a timely and professional manner and according to the terms of the Clinical Trial Agreement. Under the terms of each Clinical Trial Agreement, Opexa paid an upfront cash payment to each Institution for start-up and other costs which were charged directly to expense. Future payments by Opexa to the Institutions during the term of each Clinical Trial Agreement are based on the achievement of certain performance milestones as presented in each Clinical Trial Agreement. Unless terminated by Opexa without cause with 30 days’ notice, or unless terminated by the Institution, Investigator or Opexa for health or safety reasons, the initial term of the Clinical Trial Agreements with each Institution and Investigator is for the duration of their enrolled subjects in the Abili-T study. On October 28, 2016, Opexa announced that the Abili-T trial 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. Abili-T was a 183-patient, randomized, double-blind, placebo-controlled Phase IIb study that was conducted at 35 clinical trial sites in the U.S. and Canada and designed to evaluate the safety and efficacy of Tcelna (imilecleucel-T) in patients with SPMS. Patients in the Tcelna arm of the study received two annual courses of Tcelna treatment consisting of five subcutaneous injections per year. Opexa completed the enrollment of the Abili-T study in May 2014 and un-blinded the results from the study in late October 2016. |
10. EQUITY
10. EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
EQUITY | Summary information regarding equity related transactions for the years ended December 31, 2015 and December 31, 2016 is as follows: During 2015, equity related transactions were as follows: ● In February 2015, Opexa recognized stock-based compensation expense of $33,213 related to vested shares of restricted common stock issued, on February 28, 2014, to certain members of Opexa’s management and non-employee directors. ● On March 31, 2015, 2,557 shares of restricted common stock with an aggregate fair value of $11,250 were issued to certain non-employee directors for service on Opexa’s Board. Opexa recognized stock-based compensation of $11,250 related to these shares. The shares vested immediately upon grant. ● On April 9, 2015, Opexa issued 3,137,305 shares of common stock and Series M warrants to purchase a like number of shares upon the closing of a rights offering. Opexa raised $13,804,140 in gross proceeds, before expenses, through subscriptions for 3,137,305 units at a price of $4.40 per unit. Net proceeds were $12,095,210 after deduction of related fees and expenses, including dealer-manager fees, totaling $ 1,708,930. ● In June 2015, Opexa issued 953 shares of common stock and received gross proceeds of $3,810 upon the exercise of Series M warrants to purchase 953 shares of common stock. ● On June 30, 2015, 3,160 shares of restricted common stock with an aggregate fair value of $11,250 were issued to certain non-employee directors for service on Opexa’s Board. Opexa recognized stock-based compensation of $11,250 related to these shares. The shares vested immediately upon grant. ● July 2015, Opexa issued 150 shares of common stock and received gross proceeds of $600 upon the exercise of Series M warrants to purchase 150 shares of common stock. ● At Opexa’s annual meeting on August 28, 2015, shareholders approved an amendment to the Company’s Restated Certificate of Formation to increase the number of authorized shares of common stock from 100 million to 150 million, and the amendment was effect as of September 9, 2015. ● On September 1, 2015, pursuant to a Stock Purchase Agreement, Opexa sold 113,636 shares of common stock for $4.40 per share and issued Series N warrants to purchase a like number of shares for gross and net proceeds of $499,999 upon the closing of tranche one of a private placement. Opexa also agreed to sell and the purchasers agreed to purchase pursuant to the September 1, 2016 Stock Purchase Agreement an additional aggregate of $4.5 million of common stock in four additional tranches upon Opexa’s achievement of certain milestones to further the clinical development of OPX-212, Opexa’s autologous T-cell immunotherapy being developed for the treatment of neuromyelitis optica. ● On September 28, 2015, Opexa effected the 1:8 Reverse Stock Split. An aggregate of 1,365 shares of common stock were identified as fractional shares, and cash in the amount of $5,028 was paid in lieu of these fractional shares. Unless otherwise noted, impacted amounts included in the consolidated financial statements and notes thereto have been retroactively adjusted for the stock splits as if such stock splits occurred on the first day of the first period presented. Impacted amounts include shares of common stock issued and outstanding, shares underlying warrants and stock options, shares reserved, exercise prices of warrants and options, and loss per share. There was no impact on the amount of preferred or common stock authorized resulting from the 1:8 Reverse Stock Split. ● On September 30, 2015, 3,600 shares of restricted common stock with an aggregate fair value of $11,250 were issued to certain non-employee directors for service on Opexa’s Board. Opexa recognized stock-based compensation of $11,250 related to these shares. The shares vested immediately upon grant. ● On September 30, 2015 Opexa sold an aggregate of 75,000 shares of common stock under the ATM facility for gross and net proceed of $240,143 and $232,934, respectively. These sales settled and shares were issued in October 2015. ● In November 2015, Opexa sold an aggregate of 114,507 shares of common stock under the ATM facility for gross and net proceed of $483,634 and $469,116, respectively. These sales settled and shares were issued in December 2015. ● On December 31, 2015, 4,062 shares of restricted common stock with an aggregate fair value of $11,250 were issued to certain non-employee directors for service on Opexa’s Board. Opexa recognized stock-based compensation of $11,250 related to these shares. The shares vested immediately upon grant. During 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% vested immediately and the shares were issued on such date, and 25% vested and the shares were issued on each of June 30, 2016 and September 30, 2016. Opexa recognized stock-based compensation expense relating to these issued shares of an aggregate of $164,990. While the remaining 25% of the shares were originally scheduled to vest and be issued on December 31, 2016, the fourth increment of 25,820 shares did not vest and the shares were not issued because before the vesting date one non-employee director had resigned and the Board determined to instead pay cash to the non-employee directors for their Board service compensation. ● 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 December 31, 2016. |
11. OPTIONS AND WARRANTS
11. OPTIONS AND WARRANTS | 12 Months Ended |
Dec. 31, 2016 | |
Options And Warrants | |
OPTIONS AND WARRANTS | The Board initially adopted the Opexa Therapeutics, Inc. 2010 Stock Incentive Plan (the “2010 Plan”) on September 2, 2010 for the granting of equity incentive awards to employees, directors and consultants of Opexa, and the Plan was initially approved by the Company’s shareholders on October 19, 2010. Subsequently, on September 25, 2013, the Board amended the 2010 Plan, and the Company’s shareholders approved the amended 2010 Plan on November 8, 2013, in order to (i) increase the number of shares of common stock reserved for issuance by 375,000 shares and (ii) reset the number of stock-based awards issuable to a participant in any calendar year to align with the increase in the shares reserved. The 2010 Plan was further amended by the Board on March 29, 2016 and approved by the Company’s shareholders on May 16, 2016, in order to (i) further increase the number of shares of common stock reserved for issuance by 650,000 shares and (ii) reset the number of stock-based awards issuable to a participant in any calendar year to align with the increase in the shares reserved. The 2010 Plan is the successor to and continuation of Opexa’s June 2004 Compensatory Stock Option Plan (the “2004 Plan”). The 2004 Plan reserved a maximum of 71,875 shares of common stock for issuance pursuant to incentive stock options and nonqualified stock options granted to employees, directors and consultants. Awards were made as either incentive stock options or nonqualified stock options, with the Board having discretion to determine the number, term, exercise price and vesting of grants made under the 2004 Plan. All outstanding equity awards granted under the 2004 Plan continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the 2004 Plan, but no additional awards will be granted under the 2004 Plan subsequent to approval of the 2010 Plan. The 2010 Plan reserves a maximum of 1,103,125 shares of common stock for issuance plus the number of shares subject to stock options outstanding under the 2004 Plan that are forfeited or terminate prior to exercise and would otherwise be returned to the share reserves under the 2004 Plan and any reserved shares not issued or subject to outstanding grants, up to a maximum of 64,152 shares. The 2010 Plan provides for the grant of incentive stock options or nonqualified stock options, as well as restricted stock, stock appreciation rights, restricted stock units and performance awards that may be settled in cash, stock or other property. The Board of Directors or Compensation Committee, as applicable, administers the 2010 Plan and has discretion to determine the recipients, the number and types of stock awards to be granted and the terms and conditions of the stock awards, including the period of their exercisability and vesting. Subject to a limitation on repricing without shareholder approval, the Board or Compensation Committee, as applicable, may also determine the exercise price of options granted under the 2010 Plan. At December 31, 2016, 568,807 shares of common stock remained available for grant of awards under the 2010 Plan. Opexa accounts for stock-based compensation, including options and nonvested shares, according to the provisions of FASB ASC 718, "Share Based Payment.” During the 12 months ended December 31, 2016, Opexa recognized stock-based compensation expense of $570,991. Unamortized stock-based compensation expense as of December 31, 2016 amounted to $523,381. Stock Option Activity A summary of the stock option activity for the years 2016 and 2015 are presented below: Number of Shares Weighted Avg. Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Outstanding at December 31, 2014 302,834 $ 23.34 8.0 $ - Exercisable at December 31, 2014 120,485 $ 36.52 6.4 $ - Granted 135,430 5.22 Exercised - - Forfeited and canceled (20,860 ) 13.35 Outstanding at December 31, 2015 417,404 $ 18.04 7.7 $ - Exercisable at December 31, 2015 231,071 $ 23.58 7.0 $ - Granted 290,000 $ 2.14 Exercised - - Forfeited and canceled (225,457 ) $ 10.52 Outstanding at December 31, 2016 481,947 $ 12.14 7.6 $ - Exercisable at December 31, 2016 352,096 $ 14.95 7.1 $ - 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. During 2015, time-based options to purchase an aggregate of 71,462 shares at exercise prices ranging from $3.04 to $6.56 were granted to employees. These options have a term of ten years and have a vesting schedule of the earlier of four years or termination of employment without cause following a change of control. Fair value of $406,713 was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model for these options include (1) discount rate range of 1.95% to 2.19%, (2) expected term of 6.25 years, (3) expected volatility range of 134.18% to 144.83% and (4) zero expected dividends. During 2015, options to purchase 20,860 shares were forfeited and cancelled. Opexa recognized stock based compensation expense of $623,040 for grants made to employees during 2015. Unamortized stock compensation expense as of December 31, 2015 amounted to $1,890,846. During the 12 months ended December 31, 2016, time-based options to purchase an aggregate of 290,000 shares at exercise prices ranging from $2.13 to $4.13 were granted to employees. These options have a term of ten years and have a vesting schedule of the earlier of three years or termination of employment without cause following a change of control. Fair value of $638,779 was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model for these options include (1) discount rate range of 1.57% to 1.75%, (2) expected term of 5.56 to 10 years, (3) expected volatility range of 134.40% to 167.77% and (4) zero expected dividends. During 2016, options to purchase 223,271 shares were forfeited and cancelled. During 2016, Opexa recognized stock based compensation expense of $564,746 for grants made to employees. Unamortized stock compensation expense as of December 31, 2016 amounted to $523,381. Non-Employee Options: During 2015, options to purchase an aggregate of 63,968 shares at an exercise price of $4.24 were granted to non-employee directors for service on Opexa’s Board. Options to purchase an aggregate of 44,630 shares will expire on the earlier of 10 years or a change in control of Opexa, with 50% of the shares vesting immediately and 50% vesting on December 31, 2015. Options to purchase an aggregate of 14,875 shares have terms of 10 years, with 50% of the shares vesting immediately and 50% vesting on March 30, 2016. An option to purchase 4,463 shares will expire on the earlier of 10 years or a change in control of Opexa, with vesting in four quarterly increments beginning on June 30, 2015. Fair value of $214,844 was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model for these options include (1) discount rate of 1.95%, (2) expected term of 5.25 years, (3) expected volatility of 107.33% and (4) zero expected dividends. Opexa recognized stock based compensation expense of $212,683 for grants made to non-employee directors during 2015. Unamortized stock compensation expense as of December 31, 2015 amounted to $6,245. During the 12-month period ended December 31, 2016, no options to purchase shares were granted to non-employee directors for service on Opexa’s Board. During 2016, options to purchase 2,186 shares were forfeited and cancelled. During 2016, Opexa recognized stock based compensation expense of $6,245 for grants made to non-employee directors. Unamortized stock compensation expense as of December 31, 2016 amounted to $0. Warrant Activity A summary of warrant activity for 2016 and 2015 Number of Shares Weighted Avg. Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Outstanding at January 1, 2015 380,814 $ 29.92 2.21 - Granted 3,311,128 4.16 - - Exercised (1,103 ) 4.00 - - Forfeited and canceled (27,885 ) 74.96 - - Outstanding at December 31, 2015 3,662,954 6.30 2.17 - Exercisable at December 31, 2015 3,662,954 6.30 2.17 - Outstanding January 1, 2016 3,662,954 6.30 2.17 - Granted - - Exercised (14,501 ) 4.00 Forfeited and cancelled (51,828 ) 83.52 Outstanding at December 31, 2016 3,596,625 12.39 1.21 - Exercisable at December 31, 2016 3,596,625 12.39 1.21 - On April 9, 2015, the Company issued Series M warrants to purchase an aggregate of 3,137,305 shares of common stock upon the closing of a rights offering. The Series M warrants entitle the holders to purchase common stock at an exercise price $12.00 per share through their expiration on April 9, 2018, although such warrants offered an exercise price of $4.00 per share until June 30, 2016. Pursuant to the anti-dilution provisions of certain of the Company’s outstanding warrants and as a result of the rights offering (i) the per share exercise prices of the Series A, J, K and L warrants were adjusted to $74.96, $8.24, $8.00 and $12.72, respectively, and (ii) Series L warrants to purchase an aggregate of an additional 60,187 shares of common stock were issued. The Series A warrants expired on June 15, 2015. On September 1, 2015, the Company issued Series N warrants to purchase an aggregate of 113,636 shares of common stock at an exercise price of $12.00 per share through their expiration on April 9, 2018, although such warrants offered an exercise price of $4.00 per share until June 30, 2016. Subsequently 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 February 11, 2016, Series H warrants to purchase 51,823 shares of common stock expired and were cancelled. During June 2016, 14,501 shares of common stock were issued upon the exercise of Series M warrants. |
12. LICENSES
12. LICENSES | 12 Months Ended |
Dec. 31, 2016 | |
Licenses | |
LICENSES AND GAIN ON EXTINGUISHMENT OF LIABILITY | License Agreement with Baylor College of Medicine In 2001, Opexa entered into an agreement with Baylor College of Medicine for the exclusive worldwide license to a patient-specific, autologous T-cell immunotherapy for the treatment of MS, which is the initial T-cell technology on which Tcelna is based, including rights to certain patents held by Baylor. In consideration for the right and license to commercially exploit such technology, Opexa agreed to pay the following (per scenario 1 of the license agreement): (i) a 2% royalty on net sales of licensed patented products sold by Opexa or its affiliates where annual gross sales of such products is less than or equal to $500 million; (ii) a 1% royalty on net sales of licensed patented products sold by Opexa or its affiliates where annual gross sales of such products exceed $500 million; (iii) a 1% royalty on net sales of licensed patent pending products sold by Opexa or its affiliates; and (iv) a 1% royalty on net sales of licensed patented products or licensed patent pending products sold by any sublicensees of Opexa. Unless earlier terminated, the Baylor license agreement expires in 2025 upon expiration of the last of the licensed patent rights. |
13. SUBSEQUENT EVENTS
13. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | During January 2017, Opexa sold an aggregate of 516,278 shares of common stock under its ATM facility with IFS Securities, Inc. (doing business as Brinson Patrick, a division of IFS Securities, Inc.) as sales agent, for gross proceeds of $490,098. Opexa paid compensation and fees totaling $14,714 to the sales agent with respect to the shares sold. As part of its continuing efforts to reduce operating expenses and conserve cash following the release of data from the Abili-T clinical trial, on January 31, 2017 Opexa further reduced its workforce by terminating the employment of seven full-time employees. Opexa incurred total costs of approximately $219,000 associated with this workforce reduction. On February 1, 2017, Opexa entered into an Assignment and Assumption of Lease with KBI Biopharma, Inc., pursuant to which Opexa assigned to KBI, and KBI assumed from Opexa, all of Opexa’s remaining rights and obligations under the lease for Opexa’s 10,200 square foot corporate headquarters facility located in The Woodlands, Texas. The facility was originally leased by Opexa from Dirk D. Laukien, as landlord, pursuant to a lease dated August 19, 2005 as amended by that certain First Amendment to Lease Agreement dated May 11, 2015. In light of Opexa’s continuing evaluation of its strategic alternatives following the release of the data from the Abili-T clinical study, management deemed it advisable to reduce the office, R&D and manufacturing space and corresponding rent obligations. The lease had a remaining term through September 2020 and current monthly base rental payments of $16,666.67 with payment escalations to $17,500 over the remaining term. In connection with the lease assignment, Opexa also sold certain furniture, fixtures and equipment (including laboratory and manufacturing equipment) as well as its laboratory supplies located at its corporate headquarters to KBI for cash consideration in the amount of $50,000. |
1. BUSINESS OVERVIEW AND SUMM20
1. BUSINESS OVERVIEW AND SUMMARY OF ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Description of Business | Opexa Therapeutics, Inc. (“Opexa” or “the Company”) was initially incorporated as Sportan United Industries, Inc. (“Sportan”) in Texas in March 1991. In June 2004, PharmaFrontiers Corp. (“PharmaFrontiers”) was acquired by Sportan in a transaction accounted for as a reverse acquisition. In October 2004, PharmaFrontiers acquired all of the outstanding stock of Opexa Pharmaceuticals, Inc. (“Opexa Pharmaceuticals”), a biopharmaceutical company that previously acquired the exclusive worldwide license from Baylor College of Medicine to an patient specific, autologous T-cell immunotherapy, Tcelna® (formerly known as Tovaxin), for the initial treatment of multiple sclerosis (MS). In June 2006, the Company changed its name to Opexa Therapeutics, Inc. from PharmaFrontiers Corp. and, in January 2007, Opexa Therapeutics, Inc., the parent, merged with its wholly owned subsidiary, Opexa Pharmaceuticals with Opexa Therapeutics, Inc. being the surviving company. Opexa is a biopharmaceutical company developing personalized immunotherapies with the potential to treat major illnesses, including multiple sclerosis (MS) as well as other autoimmune diseases such as neuromyelitis optica (“NMO”). These therapies are based on the Company’s proprietary T-cell technology. Information related to its product candidates, Tcelna and OPX-212, is preliminary and investigative. Tcelna and OPX-212 have not been approved by the U.S. Food and Drug Administration (FDA) or other global regulatory agencies for marketing. On October 28, 2016, the Company announced that the Abili-T trial 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. Abili-T is a 183-patient, randomized, double-blind, placebo-controlled Phase IIb study that was conducted at 35 clinical trial sites in the U.S. and Canada and designed to evaluate the safety and efficacy of Tcelna (imilecleucel-T) in patients with secondary progressive MS (SPMS). Patients in the Tcelna arm of the study received two annual courses of Tcelna treatment consisting of five subcutaneous injections per year. The Company completed enrollment of the Abili-T study in May 2014 and un-blinded the results from the study in late October 2016. Previously, in September 2008, the Company completed a Phase IIb clinical study of Tcelna in the relapsing-remitting MS (RRMS) indication. The Company operates in a highly regulated and competitive environment. The manufacturing and marketing of pharmaceutical products require approval from, and are subject to, ongoing oversight by the Food and Drug Administration, or FDA, in the United States, by the European Medicines Agency, or EMA, in the E.U. and by comparable agencies in other countries. Obtaining approval for a new therapeutic product is never certain and may take many years and may involve expenditure of substantial resources. |
Going Concern | The accompanying audited consolidated financial statements for the 12 months ended December 31, 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 December 31, 2016, the Company had cash and cash equivalents of $3.4 million as well as accounts payable, short-term notes payable and accrued expenses aggregating $1.2 million. While the Company has historically recognized revenue related to certain upfront payments received from Ares Trading SA (“Merck Serono”), a wholly owned subsidiary of Merck Serono S.A., in connection with the Option and License Agreement and an amendment thereto between Merck Serono and the Company, the Company has never generated any commercial revenues, nor does it expect to generate any commercial revenues for the foreseeable future or other revenues in the near term that will result in cash receipts. Opexa continues to incur net losses, negative operating cash flows and has an accumulated deficit of $161,319,600 as of December 31, 2016. Following the October 28, 2016 announcement that the Abili-T trial did not meet its primary or secondary endpoints, and in order to conserve cash resources while it reevaluated its programs and explored various strategic alternatives, during the fourth quarter of 2016 and first quarter of 2017 the Company implemented several reductions in workforce totaling 90% of its then 20 full-time employees. After further analysis of the data from the Abili-T trial, the Company has determined that it will not move forward with further studies of Tcelna in SPMS at this time and is 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 is also exploring its strategic alternatives. The Company cannot fully predict its future cash needs until it completes this analysis. 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 or, if such funds are available, whether the terms or conditions would be acceptable to the Company. |
Reverse Stock Split | On September 28, 2015, the Company effected a one-for-eight reverse stock split of its common stock (the “1:8 Reverse Stock Split”) which decreased the number of common shares issued and outstanding from approximately 54.3 million shares to approximately 6.8 million shares. The number of authorized shares of common stock and preferred stock remained the same following the 1:8 Reverse Stock Split. Unless otherwise noted, impacted amounts included in the consolidated financial statements and notes thereto have been retroactively adjusted for the stock splits as if such stock splits occurred on the first day of the first period presented. Impacted amounts include shares of common stock issued and outstanding, shares underlying warrants and stock options, shares reserved, exercise prices of warrants and options, and loss per share. There was no impact on the amount of preferred or common stock authorized resulting from the 1:8 Reverse Stock Split. |
Principals of Consolidation | The consolidated financial statements include the accounts of Opexa and its wholly owned subsidiary, Opexa Hong Kong Limited (“Opexa Hong Kong”). Opexa Hong Kong was formed in the Hong Kong Special Administrative Region during 2012 in order to facilitate potential development collaborations in the pan-Asian region. Presently, Opexa Hong Kong has not entered into any agreements and has not recognized any revenues as of December 31, 2016. All intercompany transactions and balances between Opexa and Opexa Hong Kong are eliminated in consolidation. |
Use of Estimates in Financial Statement Preparation | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Certain Risks and Concentrations | Opexa is exposed to risks associated with foreign currency transactions insofar as it has used U.S. dollars to fund Opexa Hong Kong’s bank account denominated in Hong Kong dollars. As the net position of the unhedged Opexa Hong Kong bank account fluctuates, Opexa’s earnings may be negatively affected. In addition, the reported carrying value of the Company’s Hong Kong dollar-denominated assets and liabilities that remain in Opexa Hong Kong will be affected by fluctuations in the value of the U.S. dollar as compared to the Hong Kong dollar. Opexa currently does not utilize forward exchange contracts or any type of hedging instruments to hedge foreign exchange risk as Opexa believes that its overall exposure is relatively limited. As of December 31, 2016, Opexa Hong Kong reported cash and cash equivalents of $9,875 in converted U.S. dollars and does not have any reported liabilities in the consolidated balance sheets. |
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 Merck Serono. Pursuant to the terms, Merck Serono had an option to acquire an exclusive, worldwide (excluding Japan) license of Opexa’s Tcelna® program for the treatment of MS. The option was exercisable by Merck Serono prior to or upon Opexa’s completion of its Abili-T Phase IIb clinical trial for Tcelna in patients with secondary progressive MS. Opexa received an upfront payment of $5 million for granting the option and recognized revenues from the nonrefundable, up-front option fee on a straight-line basis over the estimated option exercise period which coincided with the expected completion term of the Abili-T trial. The expected completion term for revenue recognition was December 2016. 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 certain activities to be conducted in connection with preparation for operational readiness for further clinical studies of Tcelna and for providing Merck Serono with updates and analysis with respect to Opexa’s immune monitoring program that was conducted in conjunction with the Abili-T clinical trial. Opexa evaluated the Merck Serono Amendment and determined that the $3 million payment from Merck Serono had stand-alone value due to Opexa’s performance obligations thereunder. The $3 million payment was determined to be a single unit of accounting and was recognized as revenue on a straight-line basis over the period equivalent to the expected completion of the performance obligations in December 2016. On October 28, 2016, Opexa announced that the Abili-T clinical trial designed to evaluate the efficacy and safety of Tcelna in patients with SPMS did not meet its primary or secondary endpoints. On November 23, 2016, Opexa received notice from Merck Serono that Merck Serono would not be exercising the option, and as a result of such notice, the Merck Serono Agreement automatically expired. |
Cash and Cash Equivalents | For purposes of the consolidated statements of cash flows, cash equivalents include all highly liquid investments with original maturities of three months or less. The primary objectives for the fixed income investment portfolio are liquidity and safety of principal. Investments are made with the objective of achieving the highest rate of return consistent with these two objectives. Opexa’s investment policy limits investments to certain types of instruments issued by institutions primarily with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. |
Supplies Inventory | Supplies inventory during 2016 and 2015 included reagents and supplies that were used to manufacture Tcelna and placebo product in Opexa’s Phase IIb clinical study. These prepaid reagents and supplies are amortized to research and development expenses in the consolidated statements of operations over the period that these supplies were used. A single custom reagent that was used primarily for the NMO program and other Pre-Phase III activities is captured as custom reagents and reported under Other Long-Term Assets due to its material cost and three-year shelf life. Upon consumption, the cost of this reagent will be amortized to research and development expense in the consolidated statement of operations. |
Long-lived Assets | Property and equipment are stated on the basis of historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Major renewals and improvements are capitalized, while minor replacements, maintenance and repairs are charged to current operations. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. |
Deferred costs | Opexa incurs costs in connection with a debt or equity offering or in connection with the proceeds pursuant to an execution of a strategic agreement. These costs are recorded as deferred offering or deferred financing costs in the consolidated balance sheets. Such costs may consist of legal, accounting, underwriting fees and other related items incurred through the date of the debt or equity offering or the date of the execution of the strategic agreement. Costs in connection with a debt offering are amortized to interest expense over the term of the note instrument. Costs in connection with the execution of a strategic agreement in which an initial upfront payment is received are offset to the gain recognized in the consolidated statements of operations. Additional paid in capital includes costs recorded as an offset to proceeds in connection with the completion of an equity offering. Any remaining deferred offering costs that exist upon the expiration of the equity offering (or ATM program) are written off to expense. |
Income Taxes | Income tax expense is based on reported earnings before income taxes. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes, and are measured by applying enacted tax rates in effect in years in which the differences are expected to reverse. A valuation allowance is recorded to reduce the net deferred tax asset to zero because it is more likely than not that the deferred tax asset will not be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination. |
Stock-Based Compensation | Opexa accounts for share-based awards issued to employees in accordance with FASB ASC 718. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting is over a 4-year period). Additionally, Opexa accounts for share-based awards to non-employees in accordance with FASB ASC 505, and such awards are expensed over the period in which the related services are rendered at their fair value. |
Research and Development | Research and development expenses are expensed in the consolidated statements of operations as incurred in accordance with FASB ASC 730, Research and Development |
Foreign Currency Translation and Transaction Gains and Losses | Opexa records foreign currency translation adjustments and transaction gains and losses in accordance with FASB ASC 830, Foreign Currency Matters |
Net Loss per Share | Basic and diluted net loss per share is calculated based on the net loss attributable to common shareholders divided by the weighted average number of shares outstanding for the period excluding any dilutive effects of options, warrants and unvested share awards. |
Reclassifications | Certain comparative amounts from prior periods have been reclassified to conform to the current year's presentation. These changes did not affect previously reported net loss. |
Recently Issued Accounting Pronouncements | The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
3. OTHER CURRENT ASSETS (Tables
3. OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | Description 2016 2015 Deferred offering costs 111,641 28,876 Prepaid expenses 259,921 469,922 Total Other Current Assets $ 371,562 $ 498,798 |
4. PROPERTY AND EQUIPMENT (Tabl
4. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Description Life 2016 2015 Computer equipment 3 years $ 173,147 $ 193,596 Office furniture and equipment 5-7 years 238,661 247,679 Software 3 years 125,412 125,412 Laboratory equipment 7 years 1,117,173 1,120,693 Leasehold improvements 5 years 684,515 683,295 Manufacturing equipment 7 years 905,121 910,792 Subtotal: 3,244,029 3,281,467 Less: accumulated depreciation and impairment (3,194,029 ) (2,443,600 ) Property and equipment, net $ 50,000 $ 837,867 |
7. INCOME TAXES (Tables)
7. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes Tables | |
Schedule of deferred tax assets | Deferred tax asset resulting from: December 31, 2016 December 31, 2015 Net operating loss $ 25,050,750 $ 24,806,175 Research and development tax credits 2,896,079 2,593,792 Capitalized research and development costs 13,568,440 11,900,122 Subtotal 41,515,269 39,300,089 Less valuation allowance (41,151,269 ) (39,300,089 ) Net deferred tax asset $ - $ - |
8. COMMITMENTS AND CONTINGENC24
8. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Tables | |
Future minimum lease payments | Year Amount 2017 200,000 2018 201,250 2019 206,250 2020 157,500 Total future minimum lease payments $ 765,000 |
11. OPTIONS AND WARRANTS (Table
11. OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Options And Warrants Tables | |
Stock Option Activity | Number of Shares Weighted Avg. Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Outstanding at December 31, 2014 302,834 $ 23.34 8.0 $ - Exercisable at December 31, 2014 120,485 $ 36.52 6.4 $ - Granted 135,430 5.22 Exercised - - Forfeited and canceled (20,860 ) 13.35 Outstanding at December 31, 2015 417,404 $ 18.04 7.7 $ - Exercisable at December 31, 2015 231,071 $ 23.58 7.0 $ - Granted 290,000 $ 2.14 Exercised - - Forfeited and canceled (225,457 ) $ 10.52 Outstanding at December 31, 2016 481,947 $ 12.14 7.6 $ - Exercisable at December 31, 2016 352,096 $ 14.95 7.1 $ - |
Warrant Activity | Number of Shares Weighted Avg. Exercise Price Weighted Average Remaining Contract Term (# years) Intrinsic Value Outstanding at January 1, 2015 380,814 $ 29.92 2.21 - Granted 3,311,128 4.16 - - Exercised (1,103 ) 4.00 - - Forfeited and canceled (27,885 ) 74.96 - - Outstanding at December 31, 2015 3,662,954 6.30 2.17 - Exercisable at December 31, 2015 3,662,954 6.30 2.17 - Outstanding January 1, 2016 3,662,954 6.30 2.17 - Granted - - Exercised (14,501 ) 4.00 Forfeited and cancelled (51,828 ) 83.52 Outstanding at December 31, 2016 3,596,625 12.39 1.21 - Exercisable at December 31, 2016 3,596,625 12.39 1.21 - |
2. CASH AND CASH EQUIVALENTS (D
2. CASH AND CASH EQUIVALENTS (Detail Narratives) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | |
Cash and Cash Equivalents [Abstract] | ||
Investment in savings account | $ 2,800,000 | |
Percentage of interest recognized from savings account investment | 0.06% | |
Interest income from savings account investment | $ 4,188 |
3. OTHER CURRENT ASSETS (Detail
3. OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deferred offering costs | $ 111,641 | $ 28,876 |
Prepaid expenses | 259,921 | 469,922 |
Other current assets | $ 371,562 | $ 498,798 |
4. PROPERTY AND EQUIPMENT (Deta
4. PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, gross | $ 3,244,029 | $ 3,281,467 |
Less: accumulated depreciation | (3,194,029) | (2,443,600) |
Property and equipment, net | $ 50,000 | 837,867 |
Computer Equipment [Member] | ||
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, useful life | 3 years | |
Property, plant and equipment, gross | $ 173,147 | 193,596 |
Office Furniture And Equipment [Member] | ||
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, gross | $ 238,661 | 247,679 |
Office Furniture And Equipment [Member] | Minimum [Member] | ||
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, useful life | 5 years | |
Office Furniture And Equipment [Member] | Maximum [Member] | ||
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, useful life | 7 years | |
Computer Software Intangible Asset [Member] | ||
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, useful life | 3 years | |
Property, plant and equipment, gross | $ 125,412 | 125,412 |
Laboratory Equipment [Member] | ||
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, useful life | 7 years | |
Property, plant and equipment, gross | $ 1,117,173 | 1,120,693 |
Leasehold Improvements [Member] | ||
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, useful life | 5 years | |
Property, plant and equipment, gross | $ 684,515 | 683,295 |
Manufacturing Equipment [Member] | ||
Property Plant And Equipment Disclosure [Line Items] | ||
Property, plant and equipment, useful life | 7 years | |
Property, plant and equipment, gross | $ 905,121 | $ 910,792 |
4. PROPERTY AND EQUIPMENT (De29
4. PROPERTY AND EQUIPMENT (Detail Narratives) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property Plant And Equipment Disclosure [Line Items] | ||
Depreciation expense | $ 238,127 | $ 351,403 |
7. INCOME TAXES (Details)
7. INCOME TAXES (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax asset resulting from: | ||
Net Operating Loss | $ 25,050,750 | $ 24,806,175 |
Research and development tax credits | 2,896,079 | 2,593,792 |
Capitalized research and development costs | 13,568,440 | 11,900,122 |
Subtotal | 41,515,269 | 39,300,089 |
Less valuation allowance | (41,515,269) | (39,300,089) |
Net deferred tax asset | $ 0 | $ 0 |
7. INCOME TAXES (Detail Narrati
7. INCOME TAXES (Detail Narratives) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Unused net operating losses | $ 74,000,000 | $ 70,000,000 |
Capitalized research and development costs | $ 13,568,440 | $ 11,900,122 |
8. COMMITMENTS AND CONTINGENC32
8. COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2016USD ($) |
Commitments And Contingencies Details | |
2,017 | $ 200,000 |
2,018 | 201,250 |
2,019 | 206,250 |
2,020 | 157,500 |
Total future minimum lease payments | $ 765,000 |
8. COMMITMENTS AND CONTINGENC33
8. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments And Contingencies Details Narrative | ||
Rent expense | $ 203,000 | $ 153,000 |
11. OPTIONS AND WARRANTS (Detai
11. OPTIONS AND WARRANTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Options | ||
Number of Shares, Outstanding at beginning of period | 417,404 | 302,834 |
Options, Granted | 290,000 | 135,430 |
Options, Exercised | 0 | 0 |
Options, Forfeited and canceled | (225,457) | (20,860) |
Number of Shares, Outstanding at end of period | 481,947 | 417,404 |
Number of Shares, Exercisable at end of period | 352,096 | 231,071 |
Weighted Average Exercise Price, Options | ||
Weighted average exercise price, Outstanding at beginning of period | $ 18.04 | $ 23.34 |
Weighted average exercise price options, Granted | 2.14 | 5.22 |
Weighted average exercise price options, Exercised | 0 | 0 |
Weighted average exercise price options, Forfeited and canceled | 10.52 | 13.35 |
Weighted average exercise price, Outstanding at end of period | 12.14 | 18.04 |
Weighted average exercise price, Exercisable at end of period | $ 14.95 | $ 23.58 |
Weighted Average Remaining Contract Term, Options | ||
Weighted Average Remaining Contract Term, Outstanding at beginning of period | 7 years 8 months 12 days | |
Weighted Average Remaining Contract Term, Outstanding at end of period | 7 years 7 months 6 days | 7 years 8 months 12 days |
Weighted Average Remaining Contract Term, Exercisable | 7 years 1 month 6 days | 7 years |
Intrinsic Value, Options | ||
Outstanding Aggregate Intrinsic Value, beginning of period | $ 0 | $ 0 |
Outstanding Aggregate Intrinsic Value, end of period | 0 | 0 |
Exercisable Aggregate Intrinsic Value | $ 0 | $ 0 |
11. OPTIONS AND WARRANTS (Det35
11. OPTIONS AND WARRANTS (Details 1) - Warrants - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Shares, Outstanding at beginning of period | 3,662,954 | 380,814 |
Warrants, Granted | 0 | 3,311,128 |
Warrants, Exercised | (14,501) | (1,103) |
Warrants, Forfeited and canceled | (51,828) | (27,885) |
Number of Shares, Outstanding at end of period | 3,596,625 | 3,662,954 |
Number of Shares, Exercisable at end of period | 3,596,625 | 3,662,954 |
Weighted Average Exercise Price, Warrants | ||
Weighted average exercise price, Outstanding at beginning of period | $ 6.30 | $ 29.92 |
Weighted average exercise price warrants, Granted | 0 | 4.16 |
Weighted average exercise price warrants, Exercised | 4 | 4 |
Weighted average exercise price warrants, Forfeited and canceled | 83.52 | 74.96 |
Weighted average exercise price, Outstanding at end of period | 12.39 | 6.30 |
Weighted average exercise price, Exercisable at end of period | $ 12.39 | $ 6.30 |
Weighted Average Remaining Contract Term, Warrants | ||
Weighted Average Remaining Contract Term, Outstanding at beginning of period | 2 years 2 months 1 day | 2 years 2 months 16 days |
Weighted Average Remaining Contract Term, Outstanding at end of period | 1 year 2 months 16 days | 2 years 2 months 1 day |
Weighted Average Remaining Contract Term, Exercisable | 1 year 2 months 16 days | 2 years 2 months 1 day |
Intrinsic Value, Warrants | ||
Outstanding Aggregate Intrinsic Value, Beginning of period | $ 0 | $ 0 |
Aggregate Intrinsic Value Granted | 0 | 0 |
Aggregate Intrinsic Value Exercised | 0 | 0 |
Aggregate Intrinsic Value Forfeited | 0 | 0 |
Outstanding Aggregate Intrinsic Value, End of period | 0 | 0 |
Exercisable Aggregate Intrinsic Value | $ 0 | $ 0 |