Camilla Zuckero - Marketing Communications Manager, Opexa Therapeutics Neil Warma - President, Chief Executive Officer, Director Karthik Radhakrishnan - Chief Financial Officer Don Healey - Chief Scientific Officer

Jason Kolbert - Maxim Group

Greetings, and welcome to the Opexa Therapeutics Second Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Camilla Zuckero, Marketing Communications Manager. Thank you. You may begin.

Thank you, Adam. Good afternoon, everyone, and welcome to the Opexa Therapeutics quarterly conference call. During today's call, members of our Senior Management team will review Opexa's financial performance and business highlights for the second quarter ended June 30, 2015. Before turning the call over to senior management, I would like to remind everyone that this call includes forward-looking statements including financial projections and expectations of progress in our clinical development programs, that are subject to risks and uncertainties that could cause actual results to differ materially from those projected including the risks set forth in Opexa's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, as well as the specific risks and uncertainties noted in our second quarter 2015 financial results news release. With us today, are Neil Warma, President and CEO, Karthik Radhakrishnan, CFO, and additional members of Opexa's senior management team. I would now like to turn the call over to Neil.

Thanks very much Camilla. Thanks everyone for joining this afternoon for our second quarter conference call we appreciate your attention and interest. We are coming off of productive quarter which ended June 30 of 2015, operationally a productive quarter we secured capital in the first half of the year important because it provided us with runway into Q4 of next year, Q4 fourth quarter of 2016. Within this time period we expect to see potentially significant milestones for the company in both of our programs. Our Phase IIb MS trail expected to read out. In this time and our orphan disease program should be positioned to enter the clinic. So we are excited about the next several quarters moving forward. With respect to our first program we are conducting a now fully enrolled 190 patients Phase IIb clinical trial known as the Abili-T trial and this is being conducted in secondary progressive multiple sclerosis. As we all know this is a very serious disease with substantial unmet medical needs. There are very limited treatment options for patients with secondary progressive MS and the full market is estimated to be over $7 billion. So at Opexa we are aiming to be the treatment of choice for patients with the more progressive form of MS. Looking back to the contact of our Abili-T trail we have completed over 85% of all patient visits, which is encouraging again top line results are expected in the second half of next year. And as I mentioned there are really no safe and effective approved treatments for patients with Secondary Progressive MS. We also from the MS program we also have a strong potential partner Merck Serono for the MS program Merck Serono is very well known one of the largest pharmaceutical companies in the world and they have a solid track history in multiple sclerosis as well. Should the results of our Abili-T trial to be positive we would expect Merck Serono to exercise there option for Tcelna and move forward with further development of the therapy. In a monthly due move forward and should the program be successful Opexa could be in a position to receive up to $220 million in auction, exercise, commercial and development milestones plus royalties ranging from 8% to 15% of sales. Merck Serono, exercised their option they would also fund all the costs for the Phase III studies and the commercial activities. We are really pleased we announce this earlier on this year what we are really pleased to achieve an additional $3 million payment from Merck Serono in March of this year to support the Abili-T trial and this was on top of our outside the original agreement that we signed together in February 2013. So the amount was encouraging to us. Securing the cash runway into Q4 2016 has also enabled us to move our second program forward toward the clinic. We now have the pipeline of two solid programs, so in addition to executing on the MS trial, we expect to file IND with U.S. FDA Food and Drug Administration by the end of the year for our second development candidates OPX-212 and this is being developed for the treatment of Neuromyelitis Optica or NMO and to the rare orphan disease. This past quarter we continued with our IND enabling activity as well as process development and manufacturing activities to support our pre-clinical development of OPX-212. Similarly to MS, there is a huge unmet medical need with NMO. There are currently no approved treatments for this disease in the U.S. or anywhere worldwide. Earlier in the second quarter we also presented important data at this year’s American Academy of Neurology at their Annual Meeting and this was related to OPX-212. Insulated from that biomarker study, despite treatment with the B-cell depleting agent information persisted that appear to be driven by the presence of activated T-cells. And this is encouraging, we believe the supports to mechanism of action for OPX-212 in NMO. So again we are pleased, we are encouraged as we move forward with our IND enabling studies. The second program, the OPX-212 program, we believe positions Opexa favorably in the orphan disease phase. There is a lot of new coverage, there is a lot of interest in the orphan disease area these days. And although orphan disease is by definition are rare diseases affecting pure individuals. Companies who are developing candidates for orphan diseases for those who have orphan products in the market have benefited substantially through faster time to markets, streamlined regulatory pathways. But we also believe that additional orphan diseases could be targeted of our proprietary T-cell platform. So the potential we believe here is significant. I will come back to summarizing a little bit in a minute. I’d like now to turn over to Karthik Radhakrishnan, our Chief Financial Officer to give a review of the second quarter financial results. Karthik, please.

Thanks, Neil. First and foremost I would like to personally thank our shareholders for participating in the [indiscernible] earlier this year. Your participation has helped position Opexa with a very strong balance sheet and no debt. Earlier this afternoon, we filed an earnings release and a quarterly report on Form 10-Q, very detailed movement from the various financial line items. For the purposes of this call, I will confine my comments to just the cash balance and liquidity. Our cash balance at the end of June was approximately $18.3 million. Other operating cash burn rate in the first half of 2015 was approximately $1.1 million per month. Based on our current activities and projected burns, we believe we have sufficient liquidity to support the remaining clinical activities at the Phase IIb Abili T study of Tcelna in patients with secondary progressive MS. The pre-clinical activities for OPX-212 in neuromyelitis optica. And for general operations of the company into the fourth quarter of 2016. With this, I will turn the call back to Neil. Neil?

Thanks very much, Karthik. So we remain excited about the potential of the T-cell immunotherapies offer for the treatment of auto-immune diseases. And I think there maybe as a parallel to made here, kind of what our T-cells are doing for cancer, Opexa is really attempting to do for auto-immune diseases. We want to train the immune-system to fight the disease itself through our personalized T-cell immunotherapy approach. The potential we believe is significant and we remain committed to maintaining a leadership position in this area with over four clinical trials conducted to date we have seen encouraging efficacy and safety with our T-cell therapy. So obviously with that we are looking forward to the second half of next year when we receive top line data on our MS trial. And it’s taught that the secondary progressive MS represents approximately 30% to 40% of the MS market, which indicates a significant unmet medical need. And it also translates into a substantial market. If the Abili T trial is successful and Tcelna is ultimately the treatment of choice for secondary progressive MS patients. We believe that Tcelna could capture a sizeable portion of the potential multibillion dollar market opportunity and importantly, it could market significant contribution for patients with the progressive form of multiple sclerosis. Perhaps now, Adam, I’d like to open up for any questions that we might have from the audience.

Thank you, sir. [Operator Instructions] Our first question comes from the line of [indiscernible]. Please go ahead with your question.

Yes, thanks. Therefore OPX-212 for NMO what are the remaining items that you need to check the box before you start the IND?

Yes, thanks for the question Kay. Thanks for joining. OPX-212 is the orphan programs for NMO really the activities we’re doing now over the next several months include bio-activity study. So keep in mind that over the past number of months we have met with the FDA, we had a pre-IND meeting, we have also met and engaged with KOL’s of Key Opinion Leaders about our proposed mechanism of action and clinical strategy and their support and also met and engaged with the patient community as well as Guthy-Jackson foundation which is probably the strongest patient advocacy group for patients with NMO. So we’ve had a lot of input and feedback from again FDA from thought leaders, neurologist and from patients on the hypothesis around the mechanism of action and the clinical protocol. So essentially based on those discussions with FDA we are conducting a bio-activity study in an NMO model in a mouse model so those studies are moving forward and we are also continuing with process developments, manufacturing runs with samples obtained from NMO patients as well. So when you get all the documentation, all the studies together for the eventual submission of the IND to the FDA everyone to get that targeted by the end of the year. So I think its really pre-IND or IND enabling studies that we are conducting over the next several months.

Okay, great. For NMO for these patients what type of [indiscernible] treatments are currently available to them?

Don Healey to speak to that really as we mentioned there is no approved treatments for NMO patients so we typically see off-label use of B-cell therapy, but Don here is our Chief Scientific Officer.

Yes, certainly the mechanism of action relating to the clinical symptoms as well understood that is an anti-body independent mechanism in terms of causing damage to the target tissue which is extra size in the context of NMO which leads to secondary demyelination of neurons and therefore the disability that infuse. So not surprisingly a number of immune suppression agents to target B-cells or anti-body production and have activity or potential activity although none of [conformally of radiated] in registration trials that can have the potential for positive clinical benefit. One [indiscernible] well-known and most described is for Toxemia and however there are other global immune suppression used in this vigorous setting. You must also be aware of Solaris that’s been generated or used that product to compliment activation also in the NMO setting. So targeting B-cell and anti-body in complement really has been the strategy today, our interest of course is actually looking at the T-cell repertoire and selectively targeting just those T-cells that are responsible for supporting the pathology as a disease and thereby achieving positive clinical benefit without the global suppression as associated with existing therapies are currently in clinical trial or used off label.

Okay thanks. Thanks Don and keep in mind that’s important, we believe we are kind of the only company that’s targeting that T-cell and again for all of the destructed pathways to function and do their damage. They need that communication with the activated T-cell. So even if we go up after the T-cell pathway you still got and that’s what we sort new study in the future to be present at AAN and you still got that information is being driven by other pathways. So until you knock out that activated T-cell which is essentially the conductor of the orchestrate you still get that persistent information and I think we are the only company that’s going after that, selectively going after as Don said that pathogenic T-cell to essentially wipe out all the constructed disease pathways. And we did a Neil with the discussion we had with KOL to neurologist prior to launching to NMO, we are explaining this targeted approach that T-cell approached and its support and enthusiasm from the patient community and from the neurologist was very encouraging. So we think we have a pretty unique approach to targeting NMO and really set the off-label use of Toxemia T-cell therapy and side effects and horrible share or known in there as well so everybody is horrible diseases for these patients.

Well thanks for that answer and then just finally on the NMO application, can you give us a sense of what the clinical trial design might look like, I know it’s not finalized yet, but any thoughts there would be helpful.

Yes, we had some discussions again - we’ve discussed that with the FDA, we’ve discussed that with the thought leaders, with the neurologists about our thinking for clinical trial. Again this is all subject to further – for the submission of the IND to further discussions with clinical neurologists and with the FDA, but we couldn’t envision Kay possibly a dose ranging study may be two or three doses also potentially and open label study, typically we’ll look at the couple of endpoints reduction of those activated T-cells the AQP-4 reacted T-cells also looking at time to relapse. So there is a few things that we’ve drafted into our protocol. But as I said probably small study one of the interesting things that we noted or that we evaluated going to our second diseases was trial size and trial cost. And I think without orphan diseases we have divested our smaller costs. So we can – we’re able to fund the trials or so moving forward lot more cost effectively, and lot more quickly. So roughly we might see two or three doses in 20, 25 patients open label setting perhaps but again that needs to all be confirmed.

All right, thanks for that. Thanks.

Thanks for the questions Kay.

Thank you. Our next question comes from the line of Jason Kolbert with Maxim. Please go ahead with your question.

Hi, Neil thanks so much for taking the question. I would like to get into the MS trial with you a little bit and understand. Now that about 85 or I think you said in the press release 86% of patient visits has been completed help me understand the walkthrough on those numbers to a 100% the walkthrough to kind of the first looks at data, so we get a feel for that time. The relationship that Merck Serono will have as you go through that data and of course I still have lot more questions, which is help me understand the endpoints of this trial and how this is different than the prior pivotal trial. That would be very helpful. Thank you.

Thanks Jason, thanks for the great questions. As we said yes we are excited - over 85%, 86% of all patients visits have been completed I mean that just a bit of benchmark to say that we are getting closer to the output, which is the unblinded set of data, which comes in the second half of next year. So again and I would like to just take a second to thank all the investigators that are working so hard on this trial all those study coordinators and certainly all the patients that are involved in the trial a lot of it is – is their dedication hard work in the patients commitment to their schedule and routine. So again with only 15% of the study business left it’s exciting to think that light at the end of the tunnel is becoming brighter. So as far as kind of rollout as I said we are looking, we’ve said top line results in the second half of next year I think we have to keep it that date so to speak although that’s pretty précising in clinical development times. A lot of the there is a cushion comes with patients - a lot of this is based on scheduling patients to come in for their treatments for their follow up treatments. So, until that’s all nailed down again, you know making sure patients stick to that schedule is tough to really define the précising date or even week or month. But we’ve – as we’ve said all the patients have enrolled into the second year you know this is a two year study, each patient gets two courses annual courses of therapy and each annual course consist of five doses. So and ready to rollout with the first year and now into the second year study, so that’s exciting and essentially as they roll in some of them rolled out, in fact we’ve completed to study already, some are on that first dose, some are on the third and fifth dose really is a kind of conveyor belt of patients being treated. So I think if the last patient, last dose, last follow up visits, should come in the obviously in the first half of next year and then following that we look to lock the database, clean the data with the clinical terminology for clinical trials, but lock the database, clean the data, collect that information and then evaluate those top line results to be able to communicate it. So as I said we can’t really give specifics around this, because we just don’t know exactly what those timelines are going to be which is why we’re looking at the second half of next year. As far as relationship with Merck Serono again I couldn’t be more pleased with their involvement even during this option agreement time as we mentioned they kicked in an extra $3 million a few months ago to support the program, which was superb and this was kind of outside of their original agreement, which is kind of unprecedented. So we were really pleased with that, they’re enthusiastic about you know what their MS franchise, where it may develop if this trial is successful. I think we start communication from them publicly about their focus on late stage MS programs to focus on secondary progressive MS and that really lines up nicely obviously with this trial. So we will certainly work with them and you saw as part of that $3 million payment we want to sit down with them now and start thinking about Phase III planning. You also know Jason – a little more detail with you about the Immune Monitoring Program and the collection of these biomarker data that we have been with Don Healey and his group have been collecting to the course of trial, we’ve shared certain immune monitoring data with Merck-Serono. So we are looking at that. We want them to be involved quite intimately in the analysis of the biomarker data, but also of the clinical, the unblinded clinical outcome. So, once that top line data is collected and accessed, we will certainly share with Merck-Serono, we will evaluate that together ideally the data is exciting and they pull the trigger, they exercise their option and if they exercise their option and we move straight to the Phase III, the next milestone payment for Opexa should be a $25 million payment. So a lot of positive things line up for us as we evaluate the data together with Merck-Serono in the second half of year. As far as end point we’ve got into this a lot and the end points for the Phase II trial, the primary end point is whole-brain atrophy, so it’s an imaging end point and MRI end points where we are looking at the level of brain atrophy over the 24-month period of the trial. So we will take an MRI measurement, the baseline in every six months thereafter and will evaluate month 24 versus baseline. And this is done essentially by one of the top groups worldwide and that’s [indiscernible] in Canada. So the primary end point is based around brain atrophy and one of the critical endpoints, secondary endpoints is disease progression. And again these have been obviously submitted, embedded and discussed with the FDA. They are very well aware, they’re supportive of the primary endpoint being atrophy and obviously disease progression is the critical ones and number of other end points that we’re evaluating as well in addition to relapse rate and cognitive endpoints. But those are the two biggies, as far as looking at the lease progression I think is critical for second progressive MS, relapse rate not as much, disease progression is interesting, we’ve actually got data from a previous clinical study that we captured on disease progression which was encouraging and again these were open label studies in a patient sample size in MS-35. So smaller patients open-label compared to historical controls, so therefore no P-value is generated, but we did so after two years of treatment with Tcelna we have the disease progression in about 80% of patients with secondary progressive MS. So some encouraging and again I encourage anybody who wants to dig more into the data and put them all into context to read the Form 10-Q or to contact us. But the data around the endpoints we are looking after the Phase II trial, there is some precedent that we have seen in our previous trials. And I think there is a lot of precedence out there in the literature and publications connecting wholebrain atrophy to clinical outcome as well.

Perfect. Thank you. Very complete and thorough answer. So, last question is an accounting question. I just want to understand the cash burn for this quarter and what do you think the R&D numbers might look like for the entire year 2015. And then how do you project that could change in 2016. What I am really trying to do is really dial down on that $18 million cash balance to understand what the runway will look like. So, Karthik any input you can give me is really welcome.

Sure, Jason. In terms of guidance we do not give guidance in terms of future cash burn other than [indiscernible] cash will take us into the fourth quarter of 2016. But as we can expect in any clinical trial I can give you some parameters to think about it. One thing is as you do the clinical trial, when you look at R&D expenses for this year compared to the same period last year. The expense was much lower this year compared to last year, because we don’t have so many patients coming on to the trial for the first time last year. The manufacturing activities is also peaked in 2014 in terms of manufacturing we are completing or we might have completed last of the patient doses for who are in the trials, for the patients who came in June of last year would have had the second course of therapy manufacturing right now. And so the manufacturing comes up, but the costs go down. So when you look at the burn just from the Abili-T clinical trial program the peak will behind us and that is kind of reflected in our cash burn and so obviously if you do start on the NMO side that could have an impact on the cash position and the cost for the NMO trial is going to be moderate. So on one hand we have Abili-T cash fund going down and then NMO could add the burn.

Okay. Perfect, thank you. I understand and I understand how to interpret that. Congratulations on all the progress, we are really excited to kind of watch as the data set begins to mature. Thanks.

Thanks a lot Jason, Adam any other questions.

Yes sir. [Operator Instructions] Our next question comes from the line of [indiscernible] with Edison Investment Research. Please go ahead with your question.

Hi guys, thanks you for taking my questions. So you have a simple question again on the – maybe on strategy on NMO in terms of the partnering? Can you maybe just give us – maybe very early, but when would be your expected timeline for – and look into the financial partnering discussion would it be after the first Phase I study will be after the IND and also have you had any discussions with Merck about this product?

Interesting, I can’t really comment on the last part discussion with Merck, they are certainly aware of what we’re doing and they know we’ve initiated program and NMO and it’s probably a safe to say that lot of the companies that are involved with multiple sclerosis is also and some Merck Serono performance neuromyelitis optica there are a number of parallels. So I’m not sure and certainly aware and encouraged by our NMO programs. As far as the partnering strategy it’s a really good question, we tend to be very open minded here as supposed to refusing the partner or desperate to partner we tend to be opportunistic with our approach. We’ve been really encouraged with the interactions we’ve been having and the attention we’ve been getting from Pharma companies. As I mentioned at the outside during the prepared remarks again there is a lot of things around cancer immunotherapies and what’s going on in the [indiscernible] this targeted approach to target specific antigen to the specific tumors to keep our therapies and again it’ similar in a way to what we are doing here with our T-cell targeted approach. So a lot of the halo effect and the excitement that’s been oncology world is certainly rubbing off and coming into the autoimmune space and again Opexa seems to be one of the leaders and one of the few companies targeting autoimmune diseases as a lot of folks studying it out in the cancer world. So I think if you look at autoimmune and T-cell personalized therapies of comes autoimmune the top of the list and for that reason Pharma companies have been interested to speak to us about not only NMO, the unpartnered assets, but also what else can we do after platform, can Opexa be an engine for Pharma for T-cell targeted personalized therapies in autoimmune disease. Our answer is more certainly we have the potential we believe to target a number of autoimmune diseases. So with that we’ve had number of discussions with Pharma companies, we had a big showing at bio this year, back in June kind of and getting this buzz and getting the sense of enthusiasm from potential partners we hired Jason Kralic, as our VP of Business Development a few months ago and Jason comes at GSK where he is sitting up business development on the neurology side world wide. So again recognizing the interest that Pharma has in autoimmune and T-cell immunotherapies would be kind of foolish to not to entertain discussions with these companies. And again that’s what we are doing and we find that some folks are certainly interested in NMO because that is the next most advance and because of – there is a deposit of focus and in novel approach we are taking, but we also a company that are interested in what’s comes after NMO and we have not publicly stated what's’ in the short list for us, what excited to see on NMO with their certain is some other diseases a lot of these orphan diseases which again as a big buzz for these days. So again from us we are very opportunistic we are certainly have those conversation I don’t think it hurts at all and I think it helps to great deal to establish relationships with Pharma regardless of or do you have anything or what to partner or not and the conversation have been positive, it will come down to what else in our what’s in our pipeline, we have other programs as we can focus on, the Pharma steps up with interesting terms we are certainly considered that I think brings a lot of shareholder value incredibility to platform you certainly saw that with Merck Serono deal. So again keep an open mind to be opportunistic and keep the discussions moving forward which is at the focuses.

Okay that’s great. It sounds quite nicely. I look forward to further progress on MS and NMO?

Okay. Thanks. End of Q&A

Thank you. Ladies and gentlemen there are no further questions in queue at this time. I would like to turn the floor back over to Neil Warma for final comments.

Okay just like to thank on for facilitating. Thanks everyone for joining this afternoon as you heard our cash position takes us to Q4 of next year. We have a clean balance sheet with no debt, two key milestones expected in that time period you want to read in and our ongoing Phase IIb trials to Tcelna and Secondary Progressive MS. The other an orphan diseases opportunity OPX-212 and NMO moving towards the clinic and both would be diseases I want to reiterate have essentially no treatment options. So immunotherapies we know are being discussed in all circles of exciting diseases modifying therapies and from our part Opera is very pleased to meet the forefront in developing these next generation therapies. So thanks everybody for your time and attention and look forward to catching up soon.

Thank you ladies and gentlemen, this does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.