OPEXA THERAPEUTICS, INC., 10-Q filed on 5/12/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2015
May 1, 2015
Document And Entity Information [Abstract]
 
 
Entity Registrant Name
OPEXA THERAPEUTICS, INC. 
 
Entity Central Index Key
0001069308 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2015 
 
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
 
53,353,642 
Document Fiscal Period Focus
Q1 
 
Document Fiscal Year Focus
2015 
 
Consolidated Balance Sheets (USD $)
Mar. 31, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 9,572,880 
$ 9,906,373 
Other current assets
683,452 
758,943 
Total current assets
10,256,332 
10,665,316 
Property & equipment, net of accumulated depreciation of $2,196,371 and $2,099,389, respectively
1,007,532 
1,098,104 
Other long-term assets
29,204 
38,939 
Total assets
11,293,068 
11,802,359 
Current liabilities:
 
 
Accounts payable
1,152,492 
702,494 
Accrued expenses
1,272,698 
1,199,184 
Deferred revenue
2,905,165 
1,230,746 
Total current liabilities
5,330,355 
3,132,424 
Long term liabilities:
 
 
Deferred revenue, net of current portion
2,178,877 
1,230,748 
Total liabilities
7,509,232 
4,363,172 
Commitments and contingencies
   
   
Stockholders' equity:
 
 
Preferred stock, no par value, 10,000,000 shares authorized, none issued and outstanding
Common stock, $0.01 par value,100,000,000 shares authorized, 28,255,205 and 28,234,751 shares issued and outstanding
282,552 
282,348 
Additional paid in capital
148,172,372 
148,477,047 
Accumulated deficit
(144,671,088)
(141,320,208)
Total stockholders' equity
3,783,836 
7,439,187 
Total liabilities and stockholders' equity
$ 11,293,068 
$ 11,802,359 
Consolidated Balance Sheets (Parenthetical) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]
 
 
Property & equipment, accumulated depreciation
$ 2,196,371 
$ 2,099,389 
Preferred stock, no par value
$ 0 
$ 0 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
28,255,205 
28,234,751 
Common stock, shares outstanding
28,255,205 
28,234,751 
Consolidated Statements of Operations (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Revenue:
 
 
Option Revenue
$ 377,453 
$ 348,837 
Research and development
2,636,999 
2,811,139 
General and administrative
1,006,130 
1,102,880 
Depreciation and amortization
96,982 
95,586 
Operating loss
(3,362,658)
(3,660,768)
Interest income
1,478 
5,194 
Other income, net
10,300 
Net loss
$ (3,350,880)
$ (3,655,574)
Basic and diluted loss per share
$ (0.12)
$ (0.13)
Weighted average shares outstanding - Basic and diluted
28,234,751 
27,584,615 
Consolidated Statements of Changes in Stockholders' Equity (USD $)
Common Stock [Member]
Additional Paid In Capital [Member]
Accumulated Deficit [Member]
Total
Beginning Balance, Amount at Dec. 31, 2014
$ 282,348 
$ 148,477,047 
$ (141,320,208)
$ 7,439,187 
Beginning Balance, Shares at Dec. 31, 2014
28,234,751 
 
 
 
Shares issued for services, Shares
20,454 
 
 
 
Shares issued for services, Amount
204 
44,259 
   
44,463 
Option expense
   
266,954 
   
266,954 
Costs associated with rights offering
   
(615,888)
   
(615,888)
Net loss
 
 
(3,350,880)
(3,350,880)
Ending Balance, Amount at Mar. 31, 2015
$ 282,552 
$ 148,172,372 
$ (144,671,088)
$ 3,783,836 
Ending Balance, Shares at Mar. 31, 2015
28,255,205 
 
 
 
Consolidated Statements of Cash Flows (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cash flows from operating activities
 
 
Net loss
$ (3,350,880)
$ (3,655,574)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
 
 
Restricted stock expense
44,463 
100,176 
Depreciation
96,982 
95,586 
Option expense
266,954 
331,031 
Changes in:
 
 
Other current assets
75,491 
(425,605)
Accounts payable - third parties and related parties
(61,033)
(12,614)
Accrued expenses
73,515 
(4,323)
Deferred revenue
2,622,548 
(348,837)
Other assets
9,735 
11,017 
Net cash used in operating activities
(222,225)
(3,909,143)
Cash flows from investing activities
 
 
Purchase of property & equipment
(6,411)
(75,874)
Net cash used in investing activities
(6,411)
(75,874)
Cash flows from financing activities
 
 
Payment of offering costs
(104,857)
Net cash provided by financing activities
(104,857)
Net change in cash and cash equivalents
(333,493)
(3,985,017)
Cash and cash equivalents at beginning of period
9,906,373 
23,644,542 
Cash and cash equivalents at end of period
9,572,880 
19,659,525 
Cash paid for:
 
 
Interest
747 
Income taxes
Discount on convertible notes relating to:
 
 
Unpaid additions to property and equipment
14,311 
Unpaid offering costs
$ 511,031 
$ 17,467 
1. Basis of Presentation
Basis of Presentation

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.

2. Significant Accounting Polices
Significant Accounting Polices

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 to acquire an exclusive, worldwide (excluding Japan) license of Opexa’s Tcelna® program for the treatment of multiple sclerosis (“MS”).  Tcelna is currently in a Phase IIb clinical trial in patients with Secondary Progressive MS (“SPMS”). The option may be exercised by Merck Serono prior to or upon Opexa’s completion of the Phase IIb Trial.

 

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 activities described below:

 

(i)  Opexa will create a detailed Pre-Phase III Plan (including a GANTT chart containing key tasks, decision points, timing, budget and milestones) 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 (e.g., review and identification of a preferred contract manufacturing organization in Europe; set-up, identification and qualification of third parties for raw materials; validation of laboratory facilities in the U.S. and Europe; and a hiring plan for key personnel).  For Europe, the Pre-Phase III Plan would address the creation of a dedicated lab to support a Phase III trial, and for the U.S., the Pre-Phase III Plan would address the expansion of existing capabilities and infrastructure for a Phase III trial. 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, which approval may not be unreasonably withheld or delayed.  The JSC will meet at least quarterly to advise and make specific recommendations with respect to the Pre Phase III Plan.  In the event the JSC has not approved the Pre-Phase III Plan prior to the end of the Option Period (as defined in the Merck Serono Agreement), the Option Period will be extended for 60 days following approval of the Pre Phase III Plan by the JSC.

 

(ii)  Opexa will provide Merck Serono 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 (the “Program”) being conducted in conjunction with Opexa’s ongoing Abili-T clinical trial, with such updates and analysis to be shared with Merck Serono within 30 days of Opexa’s initial assessment of such information.  Opexa will inform Merck Serono of any existing or future external bioinformatics vendor used by Opexa for the Program, and Merck Serono will have the right, at its expense, to review current and future data storage and integrity measures for the on-going 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 the 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 $3 million as deferred revenue on the 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.

 

At March 31, 2015, Opexa had approximately $8.1 million in a savings account.  For the three months ended March 31, 2015, the savings account recognized an average market yield of 0.10%.  Interest income of $1,478 was recognized for the three months ended March 31, 2015 in the consolidated statements of operations.

3. Other Current Assets
Other Current Assets

Other current assets consisted of the following at March 31, 2015 and December 31, 2014:

 

Description  

March 31,

2015

   

December 31,

2014

 
Deferred offering costs   $ 259,989     $ 259,989  
Prepaid expenses     423,463       498,954  
    $ 683,452     $ 758,943  

 

Prepaid expenses at March 31, 2015 and December 31, 2014 include advance payments totaling $118,709 and $131,289, respectively, made to vendors and consultants for the conduct of the Phase IIb clinical trial in SPMS.

 

Prepaid expenses at March 31, 2015 and December 31, 2014 also include costs incurred from third parties in connection with the Merck Serono Agreement (see Note 2).  As of March 31, 2015 and December 31, 2014, the remaining costs of $38,938 in connection with the Merck Serono Agreement that are expected to be amortized over the upcoming 12-month period are capitalized and included in other current assets in the consolidated balance sheets.  The remaining costs of $29,204 in connection with the Merck Serono Agreement that are expected to be amortized beyond the upcoming 12-month period are capitalized and included in other long term assets in the consolidated balance sheets (see Note 4).

 

Deferred offering costs at March 31, 2015 and December 31, 2014 include costs incurred from third parties in connection with the implementation of a $1.5 million Purchase Agreement in November 2012 pursuant to which Opexa has the right to sell to Lincoln Park Capital Fund, LLC (“Lincoln Park”) up to $1.5 million in shares of its common stock, subject to certain conditions and limitations.  As of March 31, 2015 and December 31, 2014, the remaining costs of $ 238,154 in connection with the implementation of the $1.5 million Purchase Agreement remained capitalized and are included in other current assets in the consolidated balance sheets.  Upon the sales of shares of common stock under the $1.5 million Purchase Agreement, the remaining capitalized costs are offset against the proceeds of such sales of shares of common stock.

 

Deferred offering costs at March 31, 2015 also include costs incurred from third parties in connection with the implementation of an at-the-market program (“ATM Agreement”) in March 2014 pursuant to which Opexa may sell shares of its common stock from time to time depending upon market demand through a sales agent in transactions deemed to be an “at-the-market” offering as defined in Rule 415 of the Securities Act of 1933.  As of March 31, 2015, the remaining costs of $21,835 in connection with the implementation of the ATM Agreement remained capitalized and are included in other current assets in the consolidated balance sheets. Upon the sales of shares of common stock under the ATM Agreement, the remaining capitalized costs are offset against the proceeds of such sales of shares of common stock.

 

4. Other Long Term Assets
Other Long Term Assets

Other long term assets at March 31, 2015 and December 31, 2014 also include costs incurred from third parties in connection with the Merck Serono Agreement (see Note 2), amounting to $29,204 and $38,939, respectively, that are expected to be amortized beyond the upcoming 12-month period.

5. Equity
Equity

For the three months ended March 31, 2015, equity related transactions were as follows:

 

·Costs associated with rights offering. During the three months ended March 31, 2015, Opexa incurred costs of $615,888 associated with the rights offering consisting of legal, accounting, printing, filing fees and other related costs. These costs were recorded as an offset to subsequently received proceeds in connection with the completion of the rights offering (see Note 7).
·Opexa recognized stock based compensation expense of $33,213 related to vested shares of restricted common stock issued to certain members of Opexa’s management and non-employee directors on February 28, 2014.
·On March 31, 2015, 20,454 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.
6. Stock-Based Compensation
Stock-Based Compensation

Stock Options

 

The Board of Directors initially adopted the 2010 Stock Incentive 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. On September 25, 2013, the Board approved the Amended and Restated 2010 Stock Incentive Plan (“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 3,000,000 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 2010 Plan reserves a maximum of 3,625,000 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 513,220 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.  As of March 31, 2015, options to purchase an aggregate of 3,423,779 shares were issued and outstanding under the 2004 Plan and the 2010 Plan, and 501,824 shares remained available for the grant of options 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 three months ended March 31, 2015, Opexa recognized stock-based compensation expense of $266,954. Unamortized stock-based compensation expense as of March 31, 2015 amounted to $2,559,639.

 

Stock Option Activity

 

 A summary of stock option activity for the three months ended March 31, 2015 is presented below:

 

    Number of Shares     Weighted Avg. Exercise Price    

Weighted Average Remaining Contract Term

(# years)

    Intrinsic Value  
Outstanding at January 1, 2015     2,423,253     $ 2.92              
Granted     1,008,026       0.67              
Exercised     -       -              
Forfeited and canceled     (7,500 )     1.68              
Outstanding at March 31, 2015     3,423,779     $ 2.26       8.4     $ -  
Exercisable at March 31, 2015     1,467,068     $ 3.43       6.8     $ -  

 

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 the three months ended March 31, 2015, time-based options to purchase an aggregate of 496,250 shares at exercise prices ranging from $.53 to $.82 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 $380,537 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 1.948% to 2.05%, (2) expected term of 6.25 years, (3) expected volatility range of 141.07% to 143.46% and (4) zero expected dividends.

 

During the three months ended March 31, 2015, options to purchase 7,500 shares were forfeited and cancelled.

 

Opexa recognized stock based compensation expense of $159,194 and $221,692 for grants made to employees during the three months ended March 31, 2015 and March 31, 2014 respectively.

 

Non-Employee Options:

 

During the three months ended March 31, 2015, options to purchase an aggregate of 511,776 shares at an exercise price of $0.82 were granted to non-employee directors for service on Opexa’s Board.  Options to purchase an aggregate of 357,050 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 119,020 shares have terms of 10 years, with 50% of the shares vesting immediately and 50% vesting on March 30, 2016.  An option to purchase 35,706 shares will expire on the earlier of 10 years or a change in control of Opexa, with vesting in four quarterly increments beginning on March 31, 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 2.05%, (2) expected term of 5.25 years, (3) expected volatility of 143.46% and (4) zero expected dividends.

 

Opexa recognized stock based compensation expense of $107,760 and $109,339 for grants made to non-employee directors during the three months ended March 31, 2015 and March 31, 2014 respectively.

 

Restricted Stock

 

See Note 5 for a description of restricted stock awards made to non-employee directors under the 2010 Plan during the three months ended March 31, 2015.

 

Warrant Activity

 

A summary of warrant activity for the three months ended March 31, 2015 is presented below:

 

    Number of Shares     Weighted Avg. Exercise Price    

Weighted Average Remaining Contract Term

(# years)

    Intrinsic Value  
Outstanding at January 1, 2015     3,046,801     $ 4.08              
Granted     -       -              
Exercised     -       -              
Forfeited and canceled     -       -              
Outstanding at March 31, 2015     3,046,801     $ 4.08       1.96     $ -  
Exercisable at March 31, 2015     3,046,801     $ 4.08       1.96     $ -  

 

7. Subsequent Events
7. Subsequent Events

On March 16, 2015, Opexa distributed at no charge to holders of its common stock and to holders of its outstanding Series L warrants who were entitled to participate in the offering (the “Rights Offering”), as of 5:00 p.m., Eastern Time, on the record date of March 13, 2015, non-transferable subscription rights (“Subscription Rights”) to purchase up to 28,776,419 “Units” at a subscription price of $0.55 per unit (the “Subscription Price”). Each Subscription Right entitled holders to purchase one unit (the “Basic Subscription Right”), consisting of one share of Opexa’s common stock and a warrant (a “Series M warrant”) representing the right to purchase one share of Opexa’s common stock. The Series M warrants entitle the holder to purchase one share of Opexa’s common stock at an exercise price of (i) $0.50 per share from the date of issuance (April 9, 2015) through June 30, 2016 and (ii) $1.50 per share from July 1, 2016 through their expiration three years from the date of issuance.  If a holder fully exercised the holder’s Basic Subscription Rights, and other shareholders or warrant holders did not fully exercise their Basic Subscription Rights, the holder was entitled to an oversubscription privilege to purchase a portion of the unsubscribed units at the Subscription Price, subject to proration and ownership limitations (the “Over-Subscription Privilege”). The Subscription Rights expired at 5:00 p.m., Eastern Time, on April 8, 2015.

 

Opexa raised $13,804,140 in gross proceeds, before expenses, through subscriptions for 25,098,437 units, including the exercise of Over-Subscription Privileges. Net proceeds, after deduction of fees and expenses, including dealer-manager fees, are expected to be approximately $12 million. Opexa issued an aggregate of 25,098,437 shares of common stock and Series M warrants for a like number of shares.

 

2. Significant Accounting Polices (Policies)

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 to acquire an exclusive, worldwide (excluding Japan) license of Opexa’s Tcelna® program for the treatment of multiple sclerosis (“MS”).  Tcelna is currently in a Phase IIb clinical trial in patients with Secondary Progressive MS (“SPMS”). The option may be exercised by Merck Serono prior to or upon Opexa’s completion of the Phase IIb Trial.

 

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 activities described below:

 

(i)  Opexa will create a detailed Pre-Phase III Plan (including a GANTT chart containing key tasks, decision points, timing, budget and milestones) 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 (e.g., review and identification of a preferred contract manufacturing organization in Europe; set-up, identification and qualification of third parties for raw materials; validation of laboratory facilities in the U.S. and Europe; and a hiring plan for key personnel).  For Europe, the Pre-Phase III Plan would address the creation of a dedicated lab to support a Phase III trial, and for the U.S., the Pre-Phase III Plan would address the expansion of existing capabilities and infrastructure for a Phase III trial. 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, which approval may not be unreasonably withheld or delayed.  The JSC will meet at least quarterly to advise and make specific recommendations with respect to the Pre Phase III Plan.  In the event the JSC has not approved the Pre-Phase III Plan prior to the end of the Option Period (as defined in the Merck Serono Agreement), the Option Period will be extended for 60 days following approval of the Pre Phase III Plan by the JSC.

 

(ii)  Opexa will provide Merck Serono 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 (the “Program”) being conducted in conjunction with Opexa’s ongoing Abili-T clinical trial, with such updates and analysis to be shared with Merck Serono within 30 days of Opexa’s initial assessment of such information.  Opexa will inform Merck Serono of any existing or future external bioinformatics vendor used by Opexa for the Program, and Merck Serono will have the right, at its expense, to review current and future data storage and integrity measures for the on-going 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 the 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 $3 million as deferred revenue on the 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.

 

At March 31, 2015, Opexa had approximately $8.1 million in a savings account.  For the three months ended March 31, 2015, the savings account recognized an average market yield of 0.10%.  Interest income of $1,478 was recognized for the three months ended March 31, 2015 in the consolidated statements of operations.

3. Other Current Assets (Tables)
Other Current Assets
Description  

March 31,

2015

   

December 31,

2014

 
Deferred offering costs   $ 259,989     $ 259,989  
Prepaid expenses     423,463       498,954  
    $ 683,452     $ 758,943  
6. Stock-Based Compensation (Tables)
    Number of Shares     Weighted Avg. Exercise Price    

Weighted Average Remaining Contract Term

(# years)

    Intrinsic Value  
Outstanding at January 1, 2015     2,423,253     $ 2.92              
Granted     1,008,026       0.67              
Exercised     -       -              
Forfeited and canceled     (7,500 )     1.68              
Outstanding at March 31, 2015     3,423,779     $ 2.26       8.4     $ -  
Exercisable at March 31, 2015     1,467,068     $ 3.43       6.8     $ -  
    Number of Shares     Weighted Avg. Exercise Price    

Weighted Average Remaining Contract Term

(# years)

    Intrinsic Value  
Outstanding at January 1, 2015     3,046,801     $ 4.08              
Granted     -       -              
Exercised     -       -              
Forfeited and canceled     -       -              
Outstanding at March 31, 2015     3,046,801     $ 4.08       1.96     $ -  
Exercisable at March 31, 2015     3,046,801     $ 4.08       1.96     $ -  
3. Other Current Assets (Detail) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
 
 
Deferred offering costs
$ 259,989 
$ 259,989 
Prepaid expenses
423,463 
498,954 
Other current assets
$ 683,452 
$ 758,943 
3. Other Current Assets (Details Narrative) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Other Current Assets Details Narrative
 
 
Advance payments to vendors and consultants
$ 118,709 
$ 131,289 
6. Stock Option Activity (Details) (USD $)
3 Months Ended
Mar. 31, 2015
Number of Shares
 
Number of Shares, Outstanding at beginning of period
2,423,253 
Number of Shares, Granted
1,008,026 
Number of Shares, Exercised
Number of Shares, Forfeited and canceled
(7,500)
Number of Shares, Outstanding at end of period
3,423,779 
Number of Shares, Exercisable at end of period
1,467,068 
Weighted average exercise price
 
Weighted average exercise price, Outstanding at beginning of period
$ 2.92 
Weighted average exercise price, Granted
$ 0.67 
Weighted average exercise price, Exercised
   
Weighted average exercise price, Forfeited and canceled
$ 1.68 
Weighted average exercise price, Outstanding at end of period
$ 2.26 
Weighted average exercise price, Exercisable at end of period
$ 3.43 
Weighted average remaining contract term
 
Weighted average remaining contract term, Outstanding at end of period
8 years 4 months 24 days 
Weighted average remaining contract term, Exercisable at end of period
6 years 9 months 18 days 
Intrinsic Value
 
Intrinsic Value, Outstanding at end of period
$ 0 
Intrinsic Value, Exercisable at end of period
$ 0 
6. Warrant Activity (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Weighted average remaining contract term
 
Weighted average remaining contract term, Outstanding at end of period
8 years 4 months 24 days 
Warrant Share [Member]
 
Number of Shares
 
Number of Shares, Outstanding at beginning of period
3,046,801 
Number of Shares, Granted
Number of Shares, Exercised
Number of Shares, Forfeited and canceled
Number of Shares, Outstanding at end of period
3,046,801 
Number of Shares, Exercisable at end of period
3,046,801 
Weighted average exercise price
 
Weighted average exercise price, Outstanding at beginning of period
$ 4.08 
Weighted average exercise price, Granted
   
Weighted average exercise price, Exercised
   
Weighted average exercise price, Forfeited and canceled
   
Weighted average exercise price, Outstanding at end of period
$ 4.08 
Weighted average exercise price, Exercisable at end of period
$ 4.08 
Weighted average remaining contract term
 
Weighted average remaining contract term, Outstanding at end of period
1 year 11 months 16 days 
Weighted average remaining contract term, Exercisable at end of period
1 year 11 months 16 days 
Intrinsic Value
 
Intrinsic Value, Outstanding at end of period
$ 0 
Intrinsic Value, Exercisable at end of the period
$ 0